Leonardo Drs (DRS) AI Stock Analysis

• Market Cap: $12.79B
• Dividend Yield: 0.42%
• Average Volume (3M): 1.55M
• Price to Earnings (P/E): 55.1
• Beta (1Y): 1.04
• Revenue Growth: 11.43%
• EPS Growth: 31.92%
• Country: US
• Employees: 7,000
• Sector: Industrials
• Sector Strength: 89
• Industry: Aerospace & Defense
• EPS (TTM): 0.23
• Shares Outstanding: 266,049,200
• 10 Day Avg. Volume: 1,196,293
• 30 Day Avg. Volume: 1,550,728
• PEG Ratio: 6.79
• Price to Book (P/B): 4.40
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 48.95
• Enterprise Value/Market Cap: 0.91
• Enterprise Value/Revenue: 0.88
• Enterprise Value/Gross Profit: 14.62
• Enterprise Value/Ebitda: 7.76
• 1Y Price Target: $49.14
• Price Target Upside: 13.64% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 7

• Rating: 74 Outperform
• Price Target: $48.00 ▲(11.01%Upside)

Leonardo DRS's strong financial performance and positive earnings call highlight its growth potential, reflected in a high score. However, the valuation concerns due to high P/E ratio and modest dividend yield, along with mixed technical indicators, temper the overall enthusiasm.

Positive Factors

Defense Modernization

DRS is well aligned with the $150bn budget reconciliation bill, particularly its exposure to c-UAS, AI processing, and integrated missile defense.

Financial Performance

DRS's 1Q25 earnings beat marks a strong start to the year.

Shipbuilding Expansion

The administration's emphasis on shoring up the domestic shipbuilding industry should prove a tailwind for the company.

Negative Factors

Market Valuation

At a ~21.5x EV/2026 EBITDA, DRS is currently trading at a ~3-turn premium to peers, presenting a more balanced risk-reward proposition.

Supply Chain Risk

China's ban on germanium export poses a risk to the weapon sights business, although DRS has several years worth of supply on hand.

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 the sale of its defense electronics and technology solutions to government and military organizations. The company's key revenue streams include contracts for the development and supply of advanced military equipment, such as infrared systems, electronic warfare technology, and integrated mission systems. DRS also benefits from long-term partnerships and contracts with the U.S. Department of Defense and other allied military forces, which provide a steady flow of income. Additionally, the company may engage in research and development projects funded by government grants, further contributing to its earnings.

Leonardo Drs Financial Statement Overview

Summary

Leonardo DRS demonstrates strong financial performance with impressive revenue growth, improved gross profit margins, and robust profitability as shown by solid EBIT and net profit margins. The balance sheet is stable with low leverage and a strong equity base. Cash flow metrics further bolster its financial position, indicating strong cash generation capabilities.

Income Statement

Leonardo DRS has shown strong revenue growth over recent years, with an increase from $2,778 million in 2020 to $3,345 million in TTM (Trailing-Twelve-Months). The gross profit margin has improved to 22.7%, reflecting efficient cost management. The EBIT margin is consistent at 9.3%, and the net profit margin is solid at 7.0%. These metrics indicate robust profitability and operational efficiency, making the income statement a strong point for the company.

Balance Sheet

The company's balance sheet reveals a stable financial position with a debt-to-equity ratio of 0.14, indicating low leverage. The equity ratio stands at 62.8%, highlighting a strong equity base. The return on equity is healthy at 9.1%, showing effective use of shareholder funds. Overall, the balance sheet is solid, though there is room for improvement in liquidity and asset utilization.

Cash Flow

Leonardo DRS demonstrates positive cash flow dynamics with a significant increase in free cash flow to $291 million in TTM. The operating cash flow to net income ratio is 1.70, indicating strong cash generation relative to earnings. The free cash flow growth rate is impressive, highlighting the company's ability to generate surplus cash even after capital expenditures. These factors contribute to a strong cash flow position.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	3.42B	3.23B	2.83B	2.69B	2.88B	2.78B
Gross Profit	792.00M	736.00M	648.00M	575.00M	547.00M	494.00M
EBITDA	358.00M	376.00M	313.00M	624.00M	293.00M	229.00M
Net Income	250.00M	213.00M	168.00M	405.00M	154.00M	85.00M
Balance Sheet
Total Assets	4.08B	4.18B	3.92B	3.68B	3.07B	2.96B
Cash, Cash Equivalents and Short-Term Investments	278.00M	598.00M	467.00M	306.00M	240.00M	61.00M
Total Debt	353.00M	458.00M	497.00M	394.00M	490.00M	530.00M
Total Liabilities	1.48B	1.63B	1.60B	1.55B	1.48B	1.53B
Stockholders Equity	2.60B	2.56B	2.33B	2.13B	1.59B	1.43B
Cash Flow
Free Cash Flow	235.00M	186.00M	145.00M	-32.00M	118.00M	69.00M
Operating Cash Flow	336.00M	271.00M	205.00M	33.00M	178.00M	125.00M
Investing Cash Flow	-100.00M	-84.00M	-59.00M	436.00M	39.00M	-70.00M
Financing Cash Flow	-107.00M	-56.00M	15.00M	-403.00M	-38.00M	-80.00M

Leonardo Drs Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 43.24
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• 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 Neutral. The current price of 43.24 is below the 20-day moving average (MA) of 47.10, below the 50-day MA of 45.04, and above the 200-day MA of 36.52, indicating a neutral trend. The MACD of 0.51 indicates Positive momentum. The RSI at 37.98 is Neutral, neither overbought nor oversold. The STOCH value of 51.32 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for DRS.

Leonardo Drs Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BWXT	75 Outperform	$13.69B	47.64	28.24%	0.64%	9.87%	14.16%
DRS	74 Outperform	$12.79B	55.14	9.99%	0.42%	11.43%	31.92%
ERJ	71 Outperform	$9.05B	22.88	13.36%	0.09%	22.29%	51.90%
HII	71 Outperform	$10.30B	18.92	12.27%	2.07%	-1.04%	-21.80%
SARO	68 Neutral	$9.39B	133.74		―	16.92%	―
Sector *	67 Neutral	£2.82B	10.48	4.69%	3.54%	2.70%	-19.89%
RKLB	60 Neutral	$20.99B	―	-45.38%	―	64.98%	-10.52%

Leonardo Drs Corporate Events

Leonardo DRS Reports Strong Q2 2025 Financial Results

Leonardo DRS reported strong financial results for the second quarter of 2025, with a 10% increase in revenue to $829 million and a 42% rise in net earnings to $54 million compared to the previous year. The company also announced a $0.09 cash dividend per share to be paid on September 3, 2025, and highlighted its continued focus on disciplined execution amidst a dynamic macroeconomic environment. The results reflect healthy bookings, solid organic revenue growth, and improved profitability driven by increased demand for its advanced technologies.

The most recent analyst rating on (DRS) stock is a Hold with a $29.00 price target. To see the full list of analyst forecasts on Leonardo Drs stock, see the DRS Stock Forecast page.

Leonardo DRS Stockholders Approve Key Proposals at Meeting

On June 4, 2025, Leonardo DRS held its Annual Meeting where stockholders voted on various proposals. The election of directors saw significant support, with most nominees receiving over 250 million votes in favor. Additionally, the advisory resolution on executive compensation and the ratification of Ernst & Young LLP as the independent auditor were approved. An amendment to the company’s certificate of incorporation to remove certain supermajority voting requirements was also passed.

The most recent analyst rating on (DRS) stock is a Hold with a $30.00 price target. To see the full list of analyst forecasts on Leonardo Drs stock, see the DRS Stock Forecast page.

Leonardo DRS Reports Strong Q1 2025 Financial Results

Leonardo DRS reported strong financial results for the first quarter of 2025, ending March 31, with a 16% increase in revenue to $799 million and a 72% rise in net earnings to $50 million compared to the previous year. The company also achieved a book-to-bill ratio of 1.2x with $1 billion in bookings and an $8.6 billion backlog, reflecting robust demand for its products and services. The improved profitability and reduced cash flow usage indicate a solid start to the year, positioning the company well for future growth and shareholder returns.