Leonardo DRS, Inc. (DRS)

Price$36.60Cached quoteAs of 2026-09-05 13:29 UTC

AI: Fair-priced

Price checkStrong growth supports a premium price, but the current valuation leaves little room for disappointment.

The shares trade at roughly 33 times trailing earnings and about 29 times the midpoint of management's 2026 adjusted earnings guidance. Trailing free cash flow, meaning cash left after operating and capital spending, is about $363 million, equal to only around 3.5% of the company's market value. Those are demanding levels for a value investor. Record backlog, faster earnings growth and improving margins justify part of the premium, so the evidence supports Fair-priced rather than clearly cheap or clearly excessive.

Big pictureSales and profits have climbed steadily, while cash flow remains much more uneven between quarters.

Revenue rose from $2.83 billion in 2023 to $3.23 billion in 2024 and $3.65 billion in 2025, while net income increased from $168 million to $213 million and then $278 million. First-half 2026 revenue grew another 8% and net income grew 42%. Annual free cash flow improved to about $227 million in 2025, but first-half 2026 free cash flow was roughly negative $90 million. Large defense programs create payment, inventory and delivery cycles that can make quarterly cash generation unusually lumpy.

Business strengthThe balance sheet is healthy, although the Raft purchase will use much of that financial cushion.

At June 2026, Leonardo DRS held $270 million of cash against about $149 million of total debt, leaving roughly $121 million of net cash. Current assets were $2.04 billion versus $1.07 billion of current liabilities. Capital returns are modest: the company repurchased about $51 million of shares across 2025 and the first half of 2026 and pays a quarterly dividend. Shares outstanding nevertheless rose from about 260.2 million in 2022 to 266.8 million, showing that repurchases have not eliminated dilution.

What could change the storyBacklog conversion and lasting margin gains could justify the valuation, while weak cash conversion could undermine it.

The strongest bull case is the $5.1 billion funded backlog, up 17% year over year, combined with management's 2026 revenue guidance of $3.90 billion to $3.98 billion and higher profit guidance. The current valuation effectively assumes that strong demand, execution and margin improvement continue for several years. The bear case is more specific: recent profitability benefited from favorable product mix, higher production volumes and a lower tax rate. If those benefits fade, Raft adds debt without enough profit, or cash conversion stays weak, today's earnings multiple would be difficult to sustain.

AI: News

Second-quarter earnings surgeProfits rose sharply, backlog hit a record, and management raised its full-year profit outlook.

On July 30, Leonardo DRS reported second-quarter revenue of $913 million, up 10% from a year earlier, and net income of $86 million, up 59%. Funded backlog reached a record $5.1 billion, 17% higher year over year, and management increased its 2026 adjusted profit and per-share earnings guidance. The shares fell about 5% during that session despite the strong report. That reaction is observable, but it does not prove investors sold specifically because of valuation or margin concerns.

Raft acquisition announcedThe Raft deal expands defense software capabilities but will reduce Leonardo DRS's balance-sheet flexibility.

On July 28, Leonardo DRS agreed to acquire Raft for $450 million in cash. Raft develops mission software, data-fusion tools and artificial-intelligence systems for national-security customers. The company expects about $50 million of present-value tax benefits and says the purchase should add to adjusted per-share earnings in its first full year. Funding will come from existing cash and revolving-credit borrowings, making integration results important because the transaction changes Leonardo DRS from a net-cash position toward greater financial leverage.

Large thermal-camera orderA major camera agreement supports the sensing-growth case, although its financial value was not disclosed.

On July 15, Leonardo DRS announced an agreement to supply more than 50,000 Tenum Orbit thermal imaging cameras. The products target unmanned systems and other platforms, and the company said its manufacturing investments can support annual production in the hundreds of thousands of units. That scale could deepen the growth opportunity in infrared sensing, one of the areas already contributing to higher revenue and bookings. However, the company did not disclose the contract's dollar value or expected margins, limiting precise valuation conclusions.

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Revenue

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2025

Net income

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2025

Free cash flow

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Total cash / debt

CashTotal debt

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Financial statements

	2025	2024	2023	2022	2021	2020	2019
Revenue	$3.65B	$3.23B	$2.83B	$2.69B	$2.88B	$2.78B	$2.71B
Gross profit	$869.0M	$736.0M	$648.0M	$575.0M	$547.0M	$494.0M	$459.0M
Gross margin	23.82%	22.76%	22.93%	21.35%	19.00%	17.78%	16.91%
Research & development	$129.0M	$92.0M	$82.0M	$58.0M	$48.0M	$41.0M	$31.0M
Operating expenses	$521.0M	$443.0M	$417.0M	$14.0M	$311.0M	$313.0M	$296.0M
Operating income	$348.0M	$293.0M	$231.0M	$561.0M	$236.0M	$181.0M	$163.0M
Operating margin	9.54%	9.06%	8.17%	20.83%	8.20%	6.52%	6.01%
EBITDA	$441.0M	$384.0M	$316.0M	$626.0M	$294.0M	$234.0M	$214.0M
EBITDA margin	12.09%	11.87%	11.18%	23.25%	10.21%	8.42%	7.89%
Net income	$278.0M	$213.0M	$168.0M	$405.0M	$154.0M	$85.0M	$75.0M
Net profit margin	7.62%	6.59%	5.94%	15.04%	5.35%	3.06%	2.76%
Basic EPSper basic share	$1.05	$0.81	$0.64	$1.88	$0.73	$0.40	$0.36
Diluted EPSper diluted share	$1.03	$0.80	$0.64	$1.88	$0.73	$0.40	$0.36

Review official source filings ↗

Owners

Reported shareholders

Reference date Jun 30, 2026

1.87%of listed shares

BlackRock, Inc.4.99M shares · Jun 30, 2026

View holders

Top 20 reported holders of DRS
Holder	% owned
BlackRock, Inc.	1.87%4.99M shares
STATE STREET CORP	1.69%4.51M shares
AQR CAPITAL MANAGEMENT LLC	1.66%4.43M shares
VANGUARD PORTFOLIO MANAGEMENT LLC	1.35%3.61M shares
VANGUARD CAPITAL MANAGEMENT LLC	1.34%3.57M shares
FMR LLC	1.30%3.47M shares
FIRST TRUST ADVISORS LP	1.01%2.68M shares
PRICE T ROWE ASSOCIATES INC /MD/	0.95%2.54M shares
VOYA INVESTMENT MANAGEMENT LLC	0.94%2.52M shares
Stephens Investment Management Group LLC	0.90%2.4M shares
BESSEMER GROUP INC	0.83%2.22M shares
DIMENSIONAL FUND ADVISORS LP	0.78%2.08M shares
Invesco Ltd.	0.72%1.93M shares
NOMURA ASSET MANAGEMENT INTERNATIONAL INC.	0.63%1.67M shares
GEODE CAPITAL MANAGEMENT, LLC	0.58%1.55M shares
VAN ECK ASSOCIATES CORP	0.58%1.54M shares
MILLENNIUM MANAGEMENT LLC	0.44%1.18M shares
MASSACHUSETTS FINANCIAL SERVICES CO /MA/	0.42%1.13M shares
Capital International Investors	0.42%1.13M shares
NORGES BANK	0.37%992.32K shares

Percentages use 266.83M shares of this listed class outstanding on Jun 30, 2026.

Gray completes the 100% scale. Reported positions may overlap; holders have different reporting dates.

Source: SEC Form 13F ↗Updated Sep 29, 2026 · Quarterly data

Insider buys & sells

Jul 1, 2024–Jun 30, 2026

Buys1$1.07M disclosed value

Sells (SEC code S)48$22.73M disclosed value

Transaction	Insider	Type	Shares	Price	Value	Owned after
Jun 18, 2026Form 4 · 10b5-1	Baylouny JohnPresident and CEO	SellCommon Stock	36.5K	$45.67	$1.67M	122.4K
Jun 11, 2026Form 4 · 10b5-1	Wallace SallyEVP, Chief Operating Officer	SellCommon Stock	1.3K	$50.00	$65.0K	57.1K
Jun 8, 2026Form 4 · 10b5-1	Dippold MichaelEVP and CFO	SellCommon Stock	8.3K	$46.48	$386.6K	55.5K
Jun 4, 2026Form 4 · 10b5-1	Dorfman MarkEVP, GC and Secretary	SellCommon Stock	5.5K	$45.75	$253.3K	36.7K
Jun 3, 2026Form 4 · 10b5-1	Rinsky JasonEVP Chief Tax and Treasury	SellCommon Stock	3.9K	$46.87	$181.2K	31.3K

Review ownership filings at SEC.gov ↗

Community posts

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@tickerstat20 days ago
Leonardo DRS wins propulsion work for South Korea’s KDDX destroyer
Leonardo DRS ($DRS) received a contract from Doosan Enerbility to provide electric-propulsion equipment for South Korea’s KDDX destroyer program. The package includes permanent-magnet motors and variable-frequency drives from its 100 Series ...
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@tickerstat24 days ago
Leonardo DRS wins $39.6 million naval communications award
Leonardo DRS ($DRS) received a $39.6 million Naval Air Systems Command contract for Joint Tactical Terminal Transceiver units. The award covers engineering, production, aircraft integration, qualification and support for the EA-18G Growler. ...
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Leonardo DRS, Inc. (DRS)

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Leonardo DRS wins propulsion work for South Korea’s KDDX destroyer

Leonardo DRS wins $39.6 million naval communications award