Leonardo Drs, Inc. (DRS)
NASDAQ:DRS
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Leonardo Drs
(NASDAQ:DRS)
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Rating:76Outperform
Price Target:
$54.00
▲(17.24% Upside)
Action:ReiteratedDate:03/11/26
The score is driven primarily by solid financial fundamentals (growth and a low-leverage balance sheet) and strong technical momentum. This is partly offset by a premium valuation and the fundamental risks highlighted on the call—profitability/cash conversion variability, supply-chain material pressure, and near-term margin drag from elevated R&D and CapEx—even though 2026 guidance and backlog visibility are constructive.
Positive Factors
Record Bookings & Backlog
A multi-year book-to-bill ≥1.2x and an $8.7B backlog give multi-period revenue visibility, smoothing future revenue streams and supporting resource allocation. This durable contract backlog reduces near-term sales risk and underpins planning for capacity and long lead programs.
Negative Factors
Critical Material Shortages
Dependence on scarce inputs like germanium creates ongoing cost and timing risk for high‑tech sensing products. Persistent price volatility and supplier constraints can force contract repricing, delay deliveries, and erode margins across multi‑year programs, challenging execution consistency.
Read all positive and negative factors
Positive Factors
Negative Factors
Record Bookings & Backlog
A multi-year book-to-bill ≥1.2x and an $8.7B backlog give multi-period revenue visibility, smoothing future revenue streams and supporting resource allocation. This durable contract backlog reduces near-term sales risk and underpins planning for capacity and long lead programs.
Read all positive factors
Leonardo Drs (DRS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$12.24B
Dividend Yield1.04%
Average Volume (3M)1.13M
Price to Earnings (P/E)32.5
Beta (1Y)1.07
Revenue Growth12.27%
EPS Growth33.16%
CountryUS
Employees7,000
SectorIndustrials
Sector Strength72
IndustryAerospace & Defense
Share Statistics
EPS (TTM)0.42
Shares Outstanding265,846,200
10 Day Avg. Volume1,001,722
30 Day Avg. Volume1,125,933
Financial Highlights & Ratios
PEG Ratio1.10
Price to Book (P/B)3.31
Price to Sales (P/S)2.48
P/FCF Ratio39.84
Enterprise Value/Market Cap0.99
Enterprise Value/Revenue3.31
Enterprise Value/Gross Profit13.99
Enterprise Value/Ebitda27.57
Forecast
1Y Price Target
$51.83Price Target Upside12.53% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
EPS Forecast (FY)1.25
Revenue Forecast (FY)$3.90B
Leonardo Drs Business Overview & Revenue Model
Company Description
Leonardo DRS, Inc., together with its subsidiaries, provides defense products and technologies in the land, air, sea, space, cyber and security, and commercial domains for military applications. It operates in two segments, Advanced Sensing and Co...
How the Company Makes Money
Leonardo DRS generates revenue through multiple key streams, primarily from the sale of defense electronics and systems to government and military organizations. The company earns money by securing contracts with the U.S. Department of Defense and...
Leonardo Drs Earnings Call Summary
Earnings Call Date:Feb 24, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 05, 2026
Earnings Call Sentiment Positive
The call conveyed a broadly positive outlook: the company posted double-digit organic revenue growth (13% FY), record bookings, improving profitability (adjusted EBITDA and EPS growth) and strong free cash flow while investing heavily in R&D and capacity to capture future demand. Notable operational strengths include a key space program win, expanded infrared and radar demand, and Columbia Class execution. Offsetting risks include germanium shortages and material cost pressure, a one‑off legacy program loss that dented segment results, and elevated CapEx and R&D that compressed near‑term margins. Management provided solid 2026 guidance (6%–8% revenue growth, margin improvement) and described mitigation actions for supply constraints.Positive Updates
Strong Revenue Growth
Full year 2025 revenue of $3.6 billion, representing 13% organic growth versus 2024; Q4 2025 revenue of $1.1 billion, up 8% year-over-year.
Negative Updates
Material Shortages and Raw Material Cost Pressure
Supply chain complexity related to critical raw materials—most notably germanium—drove material cost growth and less efficient program execution; management noted price volatility may persist and will require contract repricing and supplier investments.
Read all updates
Q4-2025 Updates
Positive
Negative
Strong Revenue Growth
Full year 2025 revenue of $3.6 billion, representing 13% organic growth versus 2024; Q4 2025 revenue of $1.1 billion, up 8% year-over-year.
Read all positive updates
Company Guidance
The company guided 2026 revenue of $3.85–$3.95 billion (implying 6%–8% organic growth) with adjusted EBITDA of $505–$525 million (a 70–90 bps margin improvement versus 2025) and adjusted diluted EPS of $1.20–$1.26 per share (assuming an 18.5% tax rate and ~269 million fully diluted shares); they expect amortization roughly flat, depreciation modestly higher with D&A together ~3% of revenue, company-funded R&D to remain at a comparable percentage to 2025 (mid‑3% range), CapEx to rise to just under ~5% of revenue, free cash flow conversion of ~80% of adjusted net earnings, Q1 revenue in the low $800 millions with an adjusted EBITDA margin in the low‑11% range, revenue and EBITDA linearity similar to recent years with the back half of 2026 contributing slightly more than half of revenue and more than half of adjusted EBITDA, and modest improvements in free cash flow linearity.Leonardo Drs Financial Statement Overview
Summary
Income Statement
72
Positive
Balance Sheet
83
Very Positive
Cash Flow
64
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 3.65B | 3.23B | 2.83B | 2.69B | 2.88B |
| Gross Profit | 847.00M | 736.00M | 648.00M | 575.00M | 547.00M |
| EBITDA | 441.00M | 376.00M | 313.00M | 624.00M | 293.00M |
| Net Income | 278.00M | 213.00M | 168.00M | 405.00M | 154.00M |
Balance Sheet | |||||
| Total Assets | 4.62B | 4.18B | 3.92B | 3.68B | 3.07B |
| Cash, Cash Equivalents and Short-Term Investments | 647.00M | 598.00M | 467.00M | 306.00M | 240.00M |
| Total Debt | 470.00M | 458.00M | 497.00M | 487.00M | 490.00M |
| Total Liabilities | 1.89B | 1.63B | 1.60B | 1.55B | 1.48B |
| Stockholders Equity | 2.73B | 2.56B | 2.33B | 2.13B | 1.59B |
Cash Flow | |||||
| Free Cash Flow | 227.00M | 186.00M | 145.00M | -32.00M | 118.00M |
| Operating Cash Flow | 366.00M | 271.00M | 205.00M | 33.00M | 178.00M |
| Investing Cash Flow | -154.00M | -84.00M | -59.00M | 436.00M | 39.00M |
| Financing Cash Flow | -163.00M | -56.00M | 15.00M | -403.00M | -38.00M |
Leonardo Drs Technical Analysis
Positive
46.06
Price Trends
43.39
Positive
39.76
Positive
40.99
Positive
Market Momentum
0.82
Negative
53.26
Neutral
75.53
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DRS, the sentiment is Positive. The current price of 46.06 is above the 20-day moving average (MA) of 45.60, above the 50-day MA of 43.39, and above the 200-day MA of 40.99, indicating a bullish trend. The MACD of 0.82 indicates Negative momentum. The RSI at 53.26 is Neutral, neither overbought nor oversold. The STOCH value of 75.53 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DRS.
Leonardo Drs Risk Analysis
Leonardo Drs disclosed 55 risk factors in its most recent earnings report. Leonardo Drs reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Leonardo Drs Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $12.24B | 32.53 | 10.54% | 1.04% | 12.27% | 33.16% | |
74 Outperform | $9.91B | 25.10 | 13.20% | 0.46% | 7.11% | 13.43% | |
68 Neutral | $15.91B | 17.04 | 12.25% | 0.09% | 1.83% | -0.73% | |
67 Neutral | $15.53B | 22.09 | 12.28% | 1.53% | 2.60% | -18.22% | |
64 Neutral | $20.99B | 47.98 | 27.65% | 0.56% | 14.01% | 10.92% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
52 Neutral | $13.18B | 606.55 | 1.20% | ― | 14.00% | 23.78% |
* Industrials Sector Average
DRS
Leonardo Drs
46.06
10.88
30.91%
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Leonardo Drs Corporate Events
Executive/Board Changes
Leonardo DRS Adds Reuben Jeffery III to Board
Positive
Mar 10, 2026
On March 5, 2026, US Holding extended the term of Dr. Louis Brothers as a Class C proxy holder director on the Leonardo DRS board, reappointing him from April 1, 2026, through March 31, 2029, unless he departs earlier. His prior term had been set ...
Business Operations and StrategyFinancial Disclosures
Leonardo DRS Posts Strong Q4 and 2025 Revenue Growth
Positive
Feb 24, 2026
On February 24, 2026, Leonardo DRS reported that fourth‑quarter 2025 revenue rose to $1.1 billion and full‑year revenue to $3.6 billion, up 8% and 13% respectively, with net earnings of $102 million for the quarter and $278 million for...
Business Operations and StrategyPrivate Placements and Financing
Leonardo DRS Secures New Five-Year $500 Million Credit Facility
Positive
Jan 28, 2026
On January 28, 2026, Leonardo DRS, Inc. and certain U.S. subsidiaries entered into a new five-year senior unsecured $500 million revolving credit facility with a syndicate of lenders led by JPMorgan Chase Bank, replacing the company’s prior ...
Business Operations and StrategyExecutive/Board Changes
Leonardo DRS Names Sally Wallace Executive Vice President COO
Positive
Jan 6, 2026
On January 6, 2026, Leonardo DRS appointed longtime executive Sally Wallace as Executive Vice President and Chief Operating Officer, with immediate effect, continuing her direct reporting line to President and CEO John Baylouny. A 20-year veteran ...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.