Leonardo Drs (DRS) AI Stock Analysis

• Market Cap: $11.66B
• Dividend Yield: 1.04%
• Average Volume (3M): 1.06M
• Price to Earnings (P/E): 36.9
• 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: 1.10
• Price to Book (P/B): 3.31
• Price to Sales (P/S): 2.48
• P/FCF Ratio: 39.84
• Enterprise Value/Market Cap: 0.94
• Enterprise Value/Revenue: 3.01
• Enterprise Value/Gross Profit: 12.71
• Enterprise Value/Ebitda: 25.04
• 1Y Price Target: $51.00
• Price Target Upside: 16.39% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 73 Outperform
• Price Target: $49.00 ▲(11.82% Upside)
• Action: Reiterated Date: 02/25/26
• Date: Action: Reiterated 02/25/26

The score is driven primarily by solid fundamentals (growth and conservative leverage) and favorable technical trend signals. Earnings call commentary and 2026 guidance are supportive, but the overall rating is held back by a high P/E and ongoing risks around margin/cash-flow consistency and supply-chain/material cost pressures.

Positive Factors

Revenue & Backlog Growth

Sustained double‑digit organic growth and multi‑year backlog (book‑to‑bill ≥1.2x, $8.7B backlog) provide durable revenue visibility, supporting production planning, reinvestment and multi‑year contract capture that underpins predictable top‑line expansion.

Conservative Balance Sheet

Marked deleveraging and rising equity alongside net cash and a new $500M revolving facility increase financial flexibility, lowering refinancing risk and enabling funding of CapEx, R&D and M&A without stressing liquidity over the medium term.

Program Wins & Tech Expansion

Strategic wins in space sensing and satellite communications broaden addressable markets and deepen technological differentiation, creating durable competitive advantages across defense systems that support higher‑margin, longer‑duration contracts.

Negative Factors

Raw Material & Supply Risk

Dependence on scarce inputs like germanium creates persistent cost and delivery risk; ongoing price volatility and supplier constraints can compress margins, require contract repricing or capitalized supplier investments, and slow program execution over months.

Margin & Profitability Volatility

Uneven operating profits and swings in net margin reduce earnings quality and predictability; this makes cash conversion and return projections less reliable, complicating capital allocation and investor visibility into sustainable margin levels.

Elevated CapEx & R&D Intensity

Material step‑up in company‑funded R&D and higher CapEx supports future growth but exerts near‑term pressure on margins and free cash flow; sustained high investment rates prolong payback periods and raise execution and funding risk if revenue ramps lag.

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

Steady revenue growth through 2025 and a notably stronger, low-leverage balance sheet support the score. Offsetting factors are uneven operating profitability and inconsistent cash conversion, including a 2025 free-cash-flow decline versus 2024.

Income Statement

Revenue has expanded steadily since 2022 (about $2.69B to $3.65B in 2025), indicating solid demand and execution. Profitability is positive but mixed: gross margin has improved versus earlier years, while net margin is moderate in 2024–2025 after an unusually strong 2022. A key weakness is volatility in operating profitability (large step-down from 2022 and an inconsistent operating profit picture across periods), suggesting earnings quality and margin durability should be watched.

Balance Sheet

The balance sheet looks conservatively levered, with debt-to-equity improving meaningfully over time (about 0.37 in 2020 down to ~0.13 in 2025) alongside rising equity. Returns on equity are solid and generally improving from 2023 to 2025, supporting the view that capital is being used effectively. Main watch item: profitability swings (seen in the income statement) can still translate into variability in returns despite the strong capitalization.

Cash Flow

Cash generation is generally positive, with operating cash flow and free cash flow improving strongly from the 2022 trough (when free cash flow was negative) to healthy positive levels in 2023–2025. However, free cash flow declined in 2025 (down ~14%), and cash conversion is not consistently strong versus earnings (free cash flow runs well below net income in recent years). Overall, cash flow is improving but shows volatility and less-than-ideal consistency.

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	4.49B	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	347.00M	458.00M	497.00M	487.00M	490.00M
Total Liabilities	1.76B	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

• Technical Analysis Sentiment: Positive
• Last Price: 43.82
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: 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 43.82 is above the 20-day moving average (MA) of 39.95, above the 50-day MA of 38.32, and above the 200-day MA of 40.61, indicating a bullish trend. The MACD of 0.42 indicates Negative momentum. The RSI at 62.40 is Neutral, neither overbought nor oversold. The STOCH value of 54.77 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DRS.

Leonardo Drs Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MOG.A	74 Outperform	$11.07B	42.64	13.33%	0.46%	7.11%	13.43%
DRS	73 Outperform	$11.66B	36.87	10.52%	1.04%	12.27%	33.16%
TXT	68 Neutral	$17.24B	19.34	12.24%	0.09%	1.83%	-0.73%
HII	67 Neutral	$17.57B	28.45	12.42%	1.53%	2.60%	-18.22%
BWXT	64 Neutral	$18.68B	55.40	28.44%	0.56%	14.01%	10.92%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
KTOS	55 Neutral	$15.45B	689.06	1.31%	―	14.00%	23.78%

Leonardo Drs Corporate Events

Leonardo DRS Posts Strong Q4 and 2025 Revenue Growth

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 the year and a stable adjusted EBITDA margin of 12.4%. Bookings reached $4.2 billion for 2025, producing a 1.2x book‑to‑bill ratio and lifting backlog 3% to $8.7 billion, as strong demand for tactical radars, power and propulsion and infrared sensing, plus a net $6 million non‑routine revenue benefit from a quantum laser IP license and conclusion of a legacy foreign ground surveillance program, underpinned double‑digit growth and a confident initial outlook for 2026.

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 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.