One-glance verdict
Overvalued
$24.41 our estimate vs market $37.68
Wall Street consensus: $52.50 (115.1% higher than our fair-value estimate)
54% above our estimate, beyond the bull case
Fundamentals snapshot
Leonardo DRS, Inc.
DRS · NMS · Industrials · Aerospace & Defense
Current price
$37.68
52-week range
$32.43 - $50.59
Market cap
$10.05B
Balance sheet
Healthy
43.50x Strong cushion
Net cash $119.00M. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
2 Risks
3 rewards · 2 risks
- Reward Revenue grew 6.5% last year.
- Reward Returns 13.2% on equity, ahead of 83% of its peers.
- Risk Stock trades 13.5% above its 5-year average P/E.
- Risk Operating margin compressed from 20.8% to 10.9% over 3 years.
What this company does
Leonardo DRS, Inc.
Leonardo DRS makes high-tech electronic systems and services for the military, selling things like advanced sensors for better battlefield awareness and power systems for vehicles. Most of their money comes from defense contracts, which are important because they provide steady business for this specialized industry.
How the company got here
Leonardo DRS, originally founded as Diagnostic/Retrieval Systems, Inc. (DRS) in 1968, began with two engineers focused on signal processing for anti-submarine warfare. The company went public in 1981 and grew through acquisitions, aiming to become a significant defense contractor. A key turning point was its acquisition in 2008 by Leonardo's predecessor, Finmeccanica, which integrated DRS into a larger global aerospace and defense entity. This move expanded its reach and capabilities, allowing it to offer a broader portfolio of advanced defense technologies and systems, primarily to the U.S. military and its allies.
What it actually does
Leonardo DRS develops and manufactures advanced defense products and technologies that are crucial for modern military operations across land, air, and sea. They provide integrated systems that enhance battlefield awareness, communication, and operational effectiveness for military forces and intelligence agencies worldwide. The company's technologies are designed to give military personnel a critical advantage, often referred to as 'owning the edge,' by providing real-time information and advanced capabilities.
Advanced Sensing and Computing
This segment is the largest part of Leonardo DRS's business and focuses on creating technology that helps military platforms 'see' and 'understand' their surroundings in real-time. This includes developing advanced sensors for detecting threats, precision targeting, surveillance, and electronic warfare, as well as computing systems that process this information to aid in decision-making. Essentially, it's about giving soldiers, vehicles, and aircraft better awareness of the battlefield, whether that's identifying an enemy from afar or managing complex combat systems.
Integrated Mission Systems
This segment provides critical power and propulsion systems for military platforms, particularly for naval vessels and ground vehicles. It includes designing and manufacturing electrical propulsion systems, power conversion, energy storage, and advanced thermal management technologies. Think of it as providing the 'muscle' and 'nervous system' for these military assets, ensuring they have the reliable power and control needed to operate effectively in demanding environments.
What management is betting on now
Leonardo DRS is focusing on developing technologies that support a more autonomous, interconnected, and multi-domain battlefield of the future. Their strategy involves strengthening their position in key areas prioritized by the Department of Defense, such as advanced sensing, network computing, and electrical power systems. By providing cutting-edge solutions, they aim to ensure their customers have a decisive advantage in current missions while also preparing them for the evolving demands of modern warfare.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q4
$414.00M
FY2025 Q1
$-170.00M
FY2025 Q2
$-56.00M
FY2025 Q3
$77.00M
FY2025 Q4
$376.00M
FY2026 Q1
$-96.00M
FY2026 Q2
$6.00M
FY2026 Q3
$58.00M
Revenue
$1.07B
Net income
$115.00M
Diluted EPS
0.43
Operating cash flow
$96.00M
Free cash flow
$58.00M
Fetching…
Sources
Revenue
$913.00M
Net income
$86.00M
Diluted EPS
0.32
Operating cash flow
$35.00M
Free cash flow
$6.00M
Fetching…
Sources
Revenue
$846.00M
Net income
$62.00M
Diluted EPS
0.23
Operating cash flow
$-66.00M
Free cash flow
$-96.00M
Fetching…
Sources
Revenue
$1.06B
Net income
$102.00M
Diluted EPS
0.38
Operating cash flow
$425.00M
Free cash flow
$376.00M
Fetching…
Sources
Revenue
$960.00M
Net income
$72.00M
Diluted EPS
0.26
Operating cash flow
$107.00M
Free cash flow
$77.00M
Fetching…
Sources
Revenue
$829.00M
Net income
$54.00M
Diluted EPS
0.20
Operating cash flow
$-28.00M
Free cash flow
$-56.00M
Fetching…
Sources
Revenue
$799.00M
Net income
$50.00M
Diluted EPS
0.19
Operating cash flow
$-138.00M
Free cash flow
$-170.00M
Fetching…
Sources
Revenue
$981.00M
Net income
$89.00M
Diluted EPS
0.34
Operating cash flow
$443.00M
Free cash flow
$414.00M
Fetching…
Sources
Is it cheap or expensive?
Fair value $24.41 vs current price $37.68
Wall Street consensus is the average analyst price target: $52.50 (115.1% higher than our fair-value estimate).
Our most-likely fair value is $24.41 a share — about 35.2% below today's price of $37.68, so the stock currently looks expensive (overvalued).
Is it drowning in debt?
Healthy
Net cash $119.0M - more cash than debt. Interest coverage 43.5x.
Net debt
$-119.00M
Interest coverage
43.50x
Leonardo DRS, Inc.'s profit covers its interest bill about 43.5 times over. which is stronger than every peer shown here and 1 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Healthy
Worse cushion
Baseline
Better cushion
DRS
BASELINE
Leonardo DRS, Inc.
Total debt $175.00M Interest coverage 43.50x This is the baseline the peer rows are being compared against.
Total debt $11.00B Interest coverage 3.60x -92% vs DRS Carries about 12.1x less debt cushion than DRS.
Total debt $2.30B Interest coverage 3.34x -92% vs DRS Carries about 13.0x less debt cushion than DRS.
Total debt $1.54B Interest coverage 8.10x -81% vs DRS Carries about 5.4x less debt cushion than DRS.
Total debt $502.88M Interest coverage 0.25x -99% vs DRS Carries about 171.8x less debt cushion than DRS.
What you should know
The case for and against DRS
3 Rewards
2 Risks
Rewards
-
Revenue grew 6.5% last year.
-
Returns 13.2% on equity, ahead of 83% of its peers.
-
Free cash flow was positive in 6/10 years.
Risks
-
Stock trades 13.5% above its 5-year average P/E.
-
Operating margin compressed from 20.8% to 10.9% over 3 years.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
31.66x
Forward P/E
25.49x
P/B
3.48x
P/S
2.59x
EV/EBITDA
18.95x
PEG ratio
2.26x
Profitability
How much profit each dollar creates
Gross margin
25.3%
Operating margin
10.9%
Net margin
9.4%
ROE
13.2%
ROA
6.1%
Health
Liquidity and balance-sheet strength
Debt / equity
0.06x
Current ratio
1.88x
Quick ratio
1.50x
Total debt
$175.00M
Total cash
$294.00M
Growth
How the business has been compounding
Revenue TTM
$3.88B
Revenue 5Y CAGR
6.1%
EPS TTM
1.19
EPS 5Y CAGR
-18.2%
Cash flow
How much cash the business throws off
Operating CF TTM
$490.00M
Free CF TTM
$227.00M
FCF margin
5.8%
Dividend
Shareholder payout
Yield
0.9%
Payout ratio
30.2%
Last ex-div date
2026-08-13