Leonardo Drs (DRS) AI Stock Analysis

• Market Cap: $10.61B
• Dividend Yield: 1.04%
• Average Volume (3M): 1.06M
• Price to Earnings (P/E): 40.5
• Beta (1Y): 1.18
• Revenue Growth: 12.27%
• EPS Growth: 33.16%
• Country: US
• Employees: 7,000
• Sector: Industrials
• Sector Strength: 72
• Industry: Aerospace & Defense
• EPS (TTM): 0.42
• Shares Outstanding: 266,026,730
• 10 Day Avg. Volume: 849,306
• 30 Day Avg. Volume: 1,062,260
• PEG Ratio: 1.51
• Price to Book (P/B): 3.34
• Price to Sales (P/S): 2.64
• P/FCF Ratio: 45.86
• Enterprise Value/Market Cap: 1.07
• Enterprise Value/Revenue: 3.18
• Enterprise Value/Gross Profit: 13.60
• Enterprise Value/Ebitda: 26.66
• 1Y Price Target: $48.80
• Price Target Upside: 27.95% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 5
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 76 Outperform
• Price Target: $48.00 ▲(25.85% Upside)
• Action: Reiterated Date: 01/29/26
• Date: Action: Reiterated 01/29/26

The score is driven primarily by strong financial performance and a constructive earnings outlook (growth, bookings, and backlog). Technicals are favorable but near-overbought signals add caution, and the high P/E with a modest dividend yield is the main offset.

Positive Factors

Strong Backlog & Bookings

A large, growing backlog and strong bookings provide multi-quarter revenue visibility and reduce cyclical volatility. Funded backlog up 20% supports predictable funded revenue, underpins capacity planning, and helps sustain organic growth and contract-driven cash generation over the next several quarters.

Low Leverage

Very low leverage and a strong equity base give the company financial flexibility to invest in R&D, bid competitively on defense contracts, and absorb timing shocks. This balance sheet strength reduces refinancing risk and supports strategic initiatives without stressing cash flows.

Robust Cash Generation

Consistent free cash flow growth and strong cash conversion show the business turns earnings into liquidity. Reliable cash generation funds organic R&D, working capital for program execution, dividend payments and selective investments, lowering dependence on external financing long term.

Negative Factors

Margin Pressure

Sustained higher R&D spending and a less favorable program mix can compress margins over multiple quarters. If product mix and execution inefficiencies persist, operating profitability and free cash flow margins may remain under pressure despite topline growth, limiting reinvestment capacity.

Supply-Chain Risks

Germanium is critical for infrared and thermal products; ongoing sourcing constraints can constrain production volumes, increase input costs and delay deliveries. Persistent supply shortages would hamper backlog conversion, erode customer trust, and raise program execution risk across defense product lines.

Government Funding Dependence

Heavy reliance on DoD and allied government contracts creates exposure to federal funding cycles. Prolonged shutdowns or appropriations delays can defer awards and cash receipts, disrupt program timelines and working capital, and increase revenue timing risk over the medium term.

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 Computing, and Integrated Mission Systems. The company offers advanced sensor technologies, including infrared systems and sensors for threat detection and situational awareness; uncooled infrared systems and brownout solutions; airborne, ground vehicle mounted, and dismounted soldier electronic warfare (EW) systems; and EW software and training systems, and intelligence solutions. It also provides computing systems for ground vehicles, ships, and submarines; network and data distribution applications; sensor systems; and networked computing infrastructure on military platform. In addition, the company offers force protection systems, such as solutions for counter-unmanned aerial systems, short-range air defense systems, and active protection systems; and power control, distribution, conversion, and propulsion systems, as well as hybrid electric drive propulsion systems, energy storage, gas turbine packages, nuclear instrumentation and controls, and thermal management and refrigeration equipment. It serves the U.S. military, aerospace and defense prime contractors, government intelligence agencies, and international military customers. The company was founded in 1969 and is based in Arlington, Virginia.

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 various allied nations, often through competitive bidding processes. Additionally, revenue is generated from long-term support and maintenance contracts for their products, which provide ongoing income. Strategic partnerships with other defense contractors and technology firms also contribute to revenue growth, allowing DRS to offer integrated solutions and access new markets. Furthermore, the company invests in research and development to innovate and expand its product offerings, positioning itself favorably within the defense technology landscape.

Leonardo Drs Financial Statement Overview

Summary

Strong overall fundamentals: revenue growth (TTM +4.33%), improving profitability (gross margin 23.40%, net margin 7.43%), low leverage (debt-to-equity 0.13), and solid cash generation (TTM FCF +12.77%, OCF/NI 1.45). Slight EBIT/EBITDA margin pressure tempers the score.

Income Statement

Leonardo DRS shows strong revenue growth with a TTM increase of 4.33% and consistent improvement in gross profit margin, now at 23.40%. The net profit margin has also improved to 7.43%, indicating enhanced profitability. However, the EBIT and EBITDA margins have slightly decreased compared to previous years, suggesting some operational cost pressures.

Balance Sheet

The company maintains a healthy balance sheet with a low debt-to-equity ratio of 0.13, indicating low leverage. Return on equity is solid at 10.22%, reflecting efficient use of equity. The equity ratio stands at 62.37%, showcasing a strong equity base relative to total assets.

Cash Flow

Leonardo DRS has demonstrated robust free cash flow growth of 12.77% in the TTM period, indicating strong cash generation capabilities. The operating cash flow to net income ratio is 1.45, suggesting efficient conversion of income into cash. The free cash flow to net income ratio is 0.69, reflecting a healthy cash flow position relative to earnings.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	3.57B	3.23B	2.83B	2.69B	2.88B	2.78B
Gross Profit	835.00M	736.00M	648.00M	575.00M	547.00M	494.00M
EBITDA	426.00M	376.00M	313.00M	624.00M	293.00M	229.00M
Net Income	265.00M	213.00M	168.00M	405.00M	154.00M	85.00M
Balance Sheet
Total Assets	4.25B	4.18B	3.92B	3.68B	3.07B	2.96B
Cash, Cash Equivalents and Short-Term Investments	309.00M	598.00M	467.00M	306.00M	240.00M	61.00M
Total Debt	471.00M	458.00M	497.00M	487.00M	490.00M	530.00M
Total Liabilities	1.60B	1.63B	1.60B	1.55B	1.48B	1.53B
Stockholders Equity	2.65B	2.56B	2.33B	2.13B	1.59B	1.43B
Cash Flow
Free Cash Flow	265.00M	186.00M	145.00M	-32.00M	118.00M	69.00M
Operating Cash Flow	384.00M	271.00M	205.00M	33.00M	178.00M	125.00M
Investing Cash Flow	-134.00M	-84.00M	-59.00M	436.00M	39.00M	-70.00M
Financing Cash Flow	-139.00M	-56.00M	15.00M	-403.00M	-38.00M	-80.00M

Leonardo Drs Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 38.14
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DRS, the sentiment is Negative. The current price of 38.14 is below the 20-day moving average (MA) of 39.79, above the 50-day MA of 38.12, and below the 200-day MA of 40.59, indicating a neutral trend. The MACD of 0.07 indicates Positive momentum. The RSI at 45.45 is Neutral, neither overbought nor oversold. The STOCH value of 57.42 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DRS.

Leonardo Drs Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DRS	76 Outperform	$10.61B	40.47	10.35%	1.04%	12.27%	33.16%
MOG.A	74 Outperform	$10.41B	40.45	13.33%	0.46%	7.11%	13.43%
TXT	68 Neutral	$17.46B	19.62	12.24%	0.09%	1.83%	-0.73%
HII	67 Neutral	$16.67B	27.60	12.42%	1.53%	2.60%	-18.22%
BWXT	64 Neutral	$18.49B	60.49	26.69%	0.56%	14.01%	10.92%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
KTOS	55 Neutral	$16.56B	860.50	1.20%	―	14.00%	23.78%

Leonardo Drs Corporate Events

Leonardo DRS Secures New Five-Year $500 Million Credit Facility

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 credit agreement from November 29, 2022. The facility, which can be drawn for working capital and other general corporate purposes, features variable interest based on base rate or Term SOFR plus leverage-linked margins, commitment fees on undrawn amounts, and joint and several guarantees from most U.S. subsidiaries, while imposing customary financial covenants, including maximum total net leverage and minimum interest coverage ratios, and standard restrictions on additional debt, liens, dividends, investments, and major transactions; the prior facility was terminated with no outstanding borrowings and no early termination penalties.

The most recent analyst rating on (DRS) stock is a Buy with a $45.00 price target. To see the full list of analyst forecasts on Leonardo Drs stock, see the DRS Stock Forecast page.

Leonardo DRS Names Sally Wallace Executive Vice President COO

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 of the company with prior roles including Executive Vice President of Business Operations and President of the C4ISR Group, Wallace’s promotion underscores Leonardo DRS’s bid to strengthen its leadership bench and operational execution as it seeks sustained growth and to capitalize on strong market positions and expanding opportunities in advanced defense technologies for national security customers.

The most recent analyst rating on (DRS) stock is a Buy with a $50.00 price target. To see the full list of analyst forecasts on Leonardo Drs stock, see the DRS Stock Forecast page.

Leonardo DRS Reports Strong Q3 2025 Financial Results

Leonardo DRS reported strong financial results for the third quarter of 2025, with revenue increasing by 18% year-over-year to $960 million. The company also saw a 26% rise in net earnings and a 17% increase in adjusted EBITDA. The growth was driven by strong demand across its product lines, particularly in electric power and propulsion programs. The company declared a $0.09 cash dividend per share and made strategic investments, including increasing its stake in Hoverfly Technologies to 25%.

The most recent analyst rating on (DRS) stock is a Hold with a $44.00 price target. To see the full list of analyst forecasts on Leonardo Drs stock, see the DRS Stock Forecast page.