Leonardo DRS, Inc.

Leonardo DRS, Inc. (DRS) Market Cap

Leonardo DRS, Inc. has a market capitalization of —.

No quote data available.

CEO: John A. Baylouny

Sector: Industrials

Industry: Aerospace & Defense

IPO Date: 1985-06-24

Website: https://www.leonardodrs.com

Leonardo DRS, Inc. (DRS) - Company Information

Market Cap: -|Sector: Industrials

Company Profile

Established in Arlington, Virginia, in 1969, Leonardo DRS, Inc. is a leading supplier of advanced defense products and technologies. The company's diverse portfolio addresses military requirements across various environments, including land, air, sea, space, and cybersecurity, with additional applications in the commercial sector. Its operations are organized into two primary divisions: Advanced Sensing and Computing, and Integrated Mission Systems. DRS provides sophisticated sensing solutions, such as infrared systems for threat identification and improving situational awareness, alongside uncooled infrared technologies and systems designed to mitigate brownout conditions. Their electronic warfare (EW) capabilities encompass airborne, vehicle-mounted, and soldier-borne systems, supported by specialized EW software, training tools, and intelligence services. Furthermore, Leonardo DRS develops essential computing systems for military platforms like ground vehicles, ships, and submarines. These offerings include robust network and data distribution applications, integrated sensor systems, and resilient networked computing infrastructure. The company also specializes in force protection, delivering solutions for counter-unmanned aerial systems (C-UAS), short-range air defense, and active protection systems. Additionally, DRS is a key provider of power management and propulsion technologies, offering systems for power control, distribution, conversion, and propulsion—including hybrid electric drive systems, energy storage solutions, gas turbine packages, nuclear instrumentation and controls, and thermal management and refrigeration equipment. Leonardo DRS serves a broad client base, which includes the U.S. military, major aerospace and defense contractors, government intelligence agencies, and international armed forces.

Analyst Sentiment

78%
Strong Buy

From 10 Active Polls

1Y Forecast: $53.33

▲ +0.0% Potential Upside

Consensus Target Metrics

Low Bound

$47

Median

$54

High Bound

$59

Average

$53

Price & Moving Averages

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🎯 Wall Street Analyst Intelligence Report

1-Year structural target targets, chart projections, and sentiment maps.

Average 1Y Target
$53.33
▲ +15.81% Upside
Low Target
$47.00
2% Risk
Median Target
$54.00
17% Mid
High Target
$59.00
28% Max

Consensus Trend Projection

Trailing closures vs. 12-month metrics map.

Analyst Vote Distribution

Aggregate institutional coverage sentiment weights.

Sentiment volume allocation data unavailable.

valuation & financial ratiosdetailed financials

Historical valuation matrix unavailable.

📘 Full Research Report

ℹ️

AI-Generated Research: This report is for informational purposes only.

📘 LEONARDO DRS INC (DRS) — Investment Overview

🧩 Business Model Overview

Leonardo DRS is a defense electronics and mission-systems provider that designs, integrates, and sustains complex platforms and subsystems across air, land, sea, space, and cyber-relevant capabilities. The value chain typically runs from systems engineering and production of electronics/sensors through integration into customer programs of record, followed by ongoing sustainment (spares, software support, upgrades, and repairs).

Customer stickiness is driven by defense procurement realities: platforms require long qualification cycles, interoperability testing, and risk-managed deployment. Once DRS equipment is fielded within a customer’s architecture and training/sustainment pipeline, switching suppliers is costly in both time and risk.

💰 Revenue Streams & Monetisation Model

Revenue is generally composed of (1) program-based production and delivery for mission systems and electronics, and (2) sustainment-related income such as software support, upgrades, service contracts, and spares. Monetisation is supported by recurring elements embedded in long-lived defense systems.

Margin drivers tend to cluster around:

  • Program mix and pricing discipline (fixed-price vs. cost-type contract structures)
  • Sustainment share (service and upgrade economics often provide durability)
  • Component and supply-chain execution in electronics and production
  • Systems integration value (engineering depth and platform integration can command better economics than commodity hardware alone)

🧠 Competitive Advantages & Market Positioning

DRS’ primary moat is high switching costs created by qualification, integration, and lifecycle sustainment requirements. Defense customers prioritize reduced deployment risk, established performance history, and interoperability. Competitors face friction entering entrenched programs where existing subsystems are already integrated into a broader command, control, communications, computers, intelligence, surveillance, and reconnaissance (C4ISR) or effects architecture.

This moat is reinforced by intangibles: specialized engineering know-how, operational data feedback loops, and mission-specific systems expertise that translate into faster integration and improved reliability in the field.

  • Competitive benchmarking:
  • Northrop Grumman — broad prime with large-scale platforms and systems integration across air, space, and C4ISR; competes more at the level of prime integration programs.
  • L3Harris Technologies — strong presence in C4ISR and communications; competes heavily in electronics and mission systems with large installed bases.
  • Saab — expertise in sensors, electronic warfare, and air defense solutions; competes in mission system categories with differentiated sensor/EW offerings.

DRS’ positioning typically emphasizes defense electronics and mission systems capabilities where rapid integration, modular upgrades, and lifecycle sustainment matter. Compared with broader primes, DRS often competes more directly on subsystem performance, integration support, and upgrade pathways within customer architectures; compared with other mission-system specialists, it competes on engineering depth across multiple mission domains and sustainment leverage.

🚀 Multi-Year Growth Drivers

Over a 5–10 year horizon, the investment case rests on secular demand for modernization and increased electronic/space/cyber resilience. Key growth drivers include:

  • Persistent ISR and situational awareness needs: continued expansion of sensors, effectors, and data exploitation capabilities.
  • Electronic warfare and survivability: rising requirement to detect, identify, and counter advanced threats increases spend on mission electronics.
  • Upgrade cycles for legacy fleets: long service lives create a steady stream of retrofit programs and modernization upgrades rather than only new-build procurements.
  • Software-enabled mission systems: incremental enhancements to algorithms, sensor fusion, and communications resilience extend the addressable market for sustainment and updates.
  • Interoperability and networked operations: procurement standards that reward proven integration and validated performance benefit incumbents with installed-base experience.

⚠ Risk Factors to Monitor

  • Government budget and program risk: defense spending priorities can shift; contract cancellations or delays can affect revenue cadence and backlog conversion.
  • Cost and execution risk: electronics programs can be exposed to supply-chain disruptions, schedule slips, and margin pressure from contract terms.
  • Qualification and technical obsolescence: mission systems must remain interoperable and effective; technology changes can require design refreshes and sustained R&D.
  • Export controls and geopolitical constraints: compliance requirements can restrict sales channels or end-market scope.
  • Concentration and customer dependence: a relatively concentrated customer base can increase sensitivity to procurement cycles and contract award timing.

📊 Valuation & Market View

Defense electronics and mission-systems companies are typically valued through EV/EBITDA and earnings-based multiples that reflect expected margin durability, backlog quality, and sustainment economics. Market sensitivity often concentrates on:

  • Backlog quality and visibility (percentage of work expected to be executed and sustainment-linked)
  • Contract mix (degree of fixed-price exposure vs. more cost-type structures)
  • Margin stability and ability to manage supply chain and execution
  • Free cash flow conversion (working capital discipline and capex intensity)
  • Lifecycle sustainment trajectory (share of revenue linked to upgrades, services, and software support)

🔍 Investment Takeaway

Leonardo DRS offers an evergreen defense electronics thesis anchored by high switching costs and installed-base sustainment. The company is positioned to benefit from long-duration modernization of defense systems that require continued integration, upgrades, and lifecycle support—conditions that favor incumbents with proven engineering execution, qualification history, and mission-system interoperability expertise. The primary investment diligence focus should be on execution quality, margin resilience under contract structures, and the durability of sustainment-linked revenue streams.


⚠ AI-generated — informational only. Validate using filings before investing.

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📊 AI Financial Analysis

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Earnings Data: Q Ending 2026-06-30

"DRS reported Q2 2026 Revenue of $913m (+7.9% QoQ; +10.2% YoY) and Net Income of $86m (+38.7% QoQ; +59.3% YoY). EPS was $0.33, up from $0.23 in Q1 and $0.20 in Q2 2025. Profitability improved across the quarter: gross margin increased to 26.5% (from 24.5% in Q1 and 23.8% in Q2 2025), while net margin rose to 9.4% (from 7.3% QoQ; 6.5% YoY). Operating income climbed to $102m, and operating margin expanded to 11.2%. Cash flow quality strengthened versus Q1. Operating cash flow turned positive to $35m (from -$66m in Q1) despite working-capital effects. Free cash flow was slightly positive at $6m, after a negative -$96m in Q1, though cash at quarter-end fell to $270m from $328m. Balance sheet resilience remains strong: total assets were $4.20bn and equity was stable at $2.80bn. Leverage is low with net debt of -$121m (net cash). Shareholder payouts included $10m dividends and $12m buybacks in Q2, but total-shareholder-return impact cannot be quantified here because marketPerformance (price and 1y change) was not provided."

Revenue Growth

Good

Revenue increased to $913m (+7.9% QoQ; +10.2% YoY), indicating a constructive demand/booking environment.

Profitability

Good

Net income rose to $86m (+38.7% QoQ; +59.3% YoY). Net margin improved to 9.4% from 7.3% QoQ and 6.5% YoY; gross margin also expanded.

Cash Flow Quality

Neutral

Operating cash flow improved to +$35m from -$66m QoQ. Free cash flow was +$6m (vs. -$96m QoQ), but liquidity declined (cash -$58m) and prior-quarter working-capital volatility remains a factor.

Leverage & Balance Sheet

Strong

Low leverage and net cash position (net debt -$121m) with equity broadly stable (~$2.8bn). Assets were roughly flat sequentially.

Shareholder Returns

Neutral

Capital return continued (Q2 dividends $10m; buybacks $12m), but total return cannot be fully assessed because price/1y_change data is missing.

Analyst Sentiment & Valuation

Fair

Consensus target ($53.33) and range ($47–$59) are provided, but no current price/1y momentum was included, limiting valuation upside/downside quantification.

Disclaimer:This analysis is AI-generated for informational purposes only. Accuracy is not guaranteed and this does not constitute financial advice.

RevenueEarningsP/E RatioSharesDebtMargin %

Fundamentals Overview

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DRS delivered a strong Q2 with revenue up 10% YoY to $913M and bookings exceeding $1B (book-to-bill 1.2x), extending an 18-quarter streak at or above 1.0. Profitability expanded meaningfully: adjusted EBITDA rose 33% to $128M and margin expanded 240 bps to 14%, driven by execution, favorable mix, and program risk retirement tailwinds. The key operating story is capacity and platform-agnostic enablement in counter-UAS/tactical radar, infrared sensing, naval propulsion/network computing, and munitions-linked effectors. Management raised FY2026 adjusted EBITDA guidance to $525M–$540M and EPS to $1.34–$1.39 while maintaining revenue guidance of $3.9B–$3.975B. The $450M all-cash RAFT deal is the main strategic catalyst: RAFT was selected for the U.S. Army’s Next Gen C2 data layer, which should accelerate integration of DRS sensing/computing into an enterprise AI-driven data layer. Near-term macro risk centers on U.S. fiscal-2027 funding mechanics, but demand visibility remains anchored by backlog and bookings.

AI IconGrowth Catalysts

  • Tactical radar proliferation and accelerating order flow ahead of supply (counter-UAS enabling radars)
  • Infrared sensing traction, including high-volume camera core contract to a leading low-cost drone manufacturer (initial 50,000 units)
  • DAIRCM aircraft survivability production momentum and increasing urgency to field infrared countermeasure systems
  • Naval demand for full electric/hybrid propulsion content (Columbia, Virginia, DDG-51, LPD) plus naval network computing modernization
  • Program execution leading to retirement of program risk and stronger fixed-price accounting tailwinds

Business Development

  • Agreed to acquire RAFT for $450 million all-cash (pending acquisition; no 2026 contribution expected given expected Q4 close)
  • RAFT selected by the U.S. Army for Next Generation C2 software architecture (data layer / unified data layer)
  • Operation Jailbreak: Army-led industry hackathon integrating ~20 companies for system interoperability; DRS reported interoperability demonstration within hours
  • Received a $533 million production IDIQ contract for DAIRCM (Distributed Aperture Infrared Countermeasure system)
  • Providing essential components to platforms including THAAD; qualified supplier on THAAD
  • SDA Tranche contract referenced for sensing into missile tracking and warning

AI IconFinancial Highlights

  • Revenue $913 million, up 10% YoY (growth accelerated vs Q1)
  • Bookings exceeded $1 billion; book-to-bill 1.2x and streak of 18 consecutive quarters at or above 1.0
  • Adjusted EBITDA $128 million, up 33% YoY; adjusted EBITDA margin 14%, up 240 bps YoY
  • IMS adjusted EBITDA margin up 460 bps YoY; ASC adjusted EBITDA margin up 110 bps YoY
  • Diluted EPS $0.32, up 60% YoY; adjusted diluted EPS $0.35, up 52% YoY
  • Net earnings $86 million, up 59% YoY; driven by lower net interest expense and lower tax rate
  • Q3 outlook: revenue above $1 billion; adjusted EBITDA margin mid-13% (sequential step down due to nonrecurring Q2 program risk retirement gain)
  • Updated FY2026 outlook (no RAFT contribution in 2026): adjusted EBITDA $525–$540 million (raised from $515–$530 million); adjusted diluted EPS $1.34–$1.39; full-year tax rate assumption 16.5%; CapEx mid-4% of revenue; FCF positivity expected with 75% adjusted net earnings conversion maintained

AI IconCapital Funding

  • RAFT acquisition: $450 million all-cash (pending; funded from position of financial strength)
  • No buyback authorization/amount stated in transcript
  • No explicit debt level or cash runway figure stated in transcript

AI IconStrategy & Ops

  • Aggressively adding capacity in tactical radars for counter-UAS demand running ahead of supply
  • Counter-UAS portfolio: moved UAS program onto a sled to make it platform-agnostic
  • Maturing palletized counter-UAS offerings by incorporating different effectors/technologies to broaden capability development across vehicles
  • R&D and capacity ramp: first-half internal R&D up 16% YoY; R&D approaching 4% of revenue
  • Capital deployment: scaling tactical radar production, revitalizing foundry for next-gen infrared sensors/detectors, and deepening naval propulsion/shipping presence in Charleston

AI IconMarket Outlook

  • FY2026 revenue guidance maintained at $3.9B–$3.975B (implies 7%–9% organic growth YoY); guidance cadence assumed similar 45% of full-year revenue in first half
  • FY2026 adjusted EBITDA guidance raised to $525M–$540M
  • FY2026 adjusted diluted EPS $1.34–$1.39; diluted share count assumption unchanged at 269M shares
  • Q3: revenue above $1B; adjusted EBITDA margin mid-13%; free cash flow modestly positive and above Q2 level

AI IconRisks & Headwinds

  • U.S. budget timing risk: Congress working through fiscal 2027 funding with a continuing resolution expected to govern the calendar fourth quarter (management did not quantify impact)
  • Nonrecurring items: Q2 margin benefited from program risk retirement; Q3 margin step down reflects timing of that gain rather than underlying execution deterioration
  • Counter-UAS market evolution: capability changes driven by ongoing lessons learned (Ukraine referenced as changing capability almost weekly), requiring continuous iteration

Q&A: Analyst Interest

  • IMS margin drivers and Columbia execution: Management attributed IMS strength to improved execution led by naval propulsion, plus programmatic risk retirement in a surface-ship context and broad counter-UAS portfolio execution. They quantified the IMS margin uplift: excluding risk retirement, IMS closer to ~15% for the quarter; Charleston on pace.
  • Counter-UAS roadmap and Golden Dome: Management emphasized rapid market evolution from Ukraine lessons learned, with capability changing almost weekly. They described investing ahead of need, moving a UAS program onto a sled for platform-agnostic execution, and cited positive over-the-horizon radar progress for Golden Dome without providing specifics or timelines.
  • RAFT sizing, profitability and synergy timing: Analysts pressed for RAFT revenue scale and margin profile. Management declined revenue sizing until 2027 guidance due to late fourth-quarter close, but stated the acquisition’s EBITDA multiple aligns with DRS’ trading multiple and expects accretion both in growth and margin; they also pointed to Army selection of RAFT’s data layer as an immediate synergy enabler.

Sentiment: POSITIVE

Note: This summary was synthesized by AI from the DRS Q2 2026 earnings transcript. Financial data is complex; please verify all metrics against official SEC filings before making investment decisions.

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© 2026 Stock Market Info — Leonardo DRS, Inc. (DRS) Financial Profile