Leonardo DRS (NASDAQ:DRS) Issues Quarterly Earnings Results

Leonardo DRS (NASDAQ:DRS) posted its quarterly earnings results on Thursday. The company reported $0.35 earnings per share (EPS) for the quarter, beating the consensus estimate of $0.27 by $0.08, FiscalAI reports. Leonardo DRS had a net margin of 7.85% and a return on equity of 12.02%. The business had revenue of $913.00 million during the quarter, compared to analyst estimates of $902.19 million. During the same period in the prior year, the business posted $0.23 earnings per share. The company’s revenue was up 10.1% on a year-over-year basis. Leonardo DRS updated its FY 2026 guidance to 1.340-1.390 EPS.

Here are the key takeaways from Leonardo DRS’s conference call:

• Strong Q2 execution: Revenue rose 10% year over year to $913 million, while adjusted EBITDA increased 33% to $128 million and margin expanded 240 basis points to 14%. Growth was led by tactical radars, electric power and propulsion, infrared sensing, and force protection.
• Demand and visibility remain robust: Bookings exceeded $1 billion, producing a 1.2x book-to-bill ratio and extending the company’s streak to 18 quarters at or above 1.0x. Leonardo DRS exited the quarter with record funded backlog and cited sustained demand for counter-UAS, air defense, missile systems, naval platforms, and space capabilities.
• The company raised its full-year 2026 adjusted EBITDA outlook to $525 million-$540 million from $515 million-$530 million and adjusted diluted EPS guidance to $1.34-$1.39, while maintaining revenue guidance of $3.9 billion-$3.975 billion. Management expects Q3 revenue above $1 billion and free cash flow to remain positive.
• DRS agreed to acquire Raft for $450 million in cash, adding open-architecture mission software, AI, and data-fusion capabilities while expanding its presence with the Air Force, Space Force, special operations, and intelligence customers. Management expects the deal to be accretive to adjusted EPS in the first full year of ownership, although it is excluded from 2026 guidance.
• The company is increasing investment to capture future demand, with R&D approaching 4% of revenue and full-year capital expenditures expected in the mid-4% range of revenue. Q3 adjusted EBITDA margin is expected to decline to the mid-13% range because Q2 benefited from a non-recurring program-risk retirement gain, not from weaker underlying execution.

Leonardo DRS Stock Down 2.0%

Shares of DRS traded down $0.92 on Thursday, reaching $45.62. The stock had a trading volume of 1,175,299 shares, compared to its average volume of 1,128,365. The firm has a market capitalization of $12.17 billion, a price-to-earnings ratio of 42.64, a price-to-earnings-growth ratio of 3.55 and a beta of 0.36. The company has a 50-day simple moving average of $45.65 and a 200-day simple moving average of $43.90. Leonardo DRS has a 12-month low of $32.43 and a 12-month high of $50.59. The company has a debt-to-equity ratio of 0.05, a quick ratio of 1.52 and a current ratio of 1.86.

Leonardo DRS Dividend Announcement

The company also recently announced a quarterly dividend, which will be paid on Thursday, August 27th. Stockholders of record on Thursday, August 13th will be given a $0.09 dividend. The ex-dividend date of this dividend is Thursday, August 13th. This represents a $0.36 annualized dividend and a dividend yield of 0.8%. Leonardo DRS’s dividend payout ratio is currently 33.64%.

Insider Buying and Selling

In other Leonardo DRS news, CFO Michael Dippold sold 8,318 shares of the company’s stock in a transaction dated Monday, June 8th. The shares were sold at an average price of $46.48, for a total value of $386,620.64. Following the sale, the chief financial officer owned 55,460 shares in the company, valued at approximately $2,577,780.80. This represents a 13.04% decrease in their ownership of the stock. The sale was disclosed in a document filed with the Securities & Exchange Commission, which can be accessed through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, Director Reuben Jeffery III purchased 25,000 shares of the business’s stock in a transaction that occurred on Tuesday, May 19th. The stock was bought at an average price of $42.77 per share, for a total transaction of $1,069,250.00. Following the purchase, the director directly owned 25,000 shares in the company, valued at $1,069,250. The trade was a ∞ increase in their ownership of the stock. The disclosure for this purchase is available in the SEC filing. Insiders sold 65,364 shares of company stock worth $2,994,785 over the last 90 days. Corporate insiders own 0.25% of the company’s stock.

Institutional Inflows and Outflows

A number of institutional investors have recently bought and sold shares of DRS. Meeder Asset Management Inc. purchased a new position in shares of Leonardo DRS during the 4th quarter valued at $261,000. Integrated Wealth Concepts LLC boosted its holdings in shares of Leonardo DRS by 28.7% during the 3rd quarter. Integrated Wealth Concepts LLC now owns 5,679 shares of the company’s stock valued at $258,000 after purchasing an additional 1,267 shares during the last quarter. Polymer Capital Management US LLC purchased a new position in shares of Leonardo DRS during the third quarter valued at about $252,000. Schroder Investment Management Group bought a new stake in shares of Leonardo DRS in the fourth quarter worth about $249,000. Finally, Cibc World Market Inc. lifted its position in shares of Leonardo DRS by 6.3% in the fourth quarter. Cibc World Market Inc. now owns 7,128 shares of the company’s stock worth $243,000 after buying an additional 425 shares in the last quarter. Institutional investors own 18.76% of the company’s stock.

Analyst Upgrades and Downgrades

Several brokerages recently weighed in on DRS. Truist Financial upgraded Leonardo DRS to a “strong-buy” rating in a report on Friday, May 1st. Weiss Ratings upgraded Leonardo DRS from a “hold (c)” rating to a “hold (c+)” rating in a research report on Thursday, July 23rd. Canaccord Genuity Group raised their target price on shares of Leonardo DRS from $52.00 to $54.00 and gave the stock a “buy” rating in a report on Wednesday, May 6th. Finally, Wall Street Zen raised shares of Leonardo DRS from a “hold” rating to a “buy” rating in a research note on Sunday, May 10th. One research analyst has rated the stock with a Strong Buy rating, two have issued a Buy rating and three have issued a Hold rating to the company. Based on data from MarketBeat, Leonardo DRS presently has an average rating of “Moderate Buy” and an average price target of $53.75.

Key Leonardo DRS News

Here are the key news stories impacting Leonardo DRS this week:

• Positive Sentiment: Q2 results exceeded expectations. Revenue increased 10% year over year to $913 million, topping the $902.2 million consensus estimate, while adjusted EPS rose 52% to $0.35 versus expectations of $0.27. Net earnings climbed 59% to $86 million. Leonardo DRS Surpasses Q2 Earnings and Revenue Estimates
• Positive Sentiment: Profitability and demand improved. Adjusted EBITDA grew 33% to $128 million, with margin expanding to 14.0%. Bookings reached $1.1 billion, producing a 1.2x book-to-bill ratio, while funded backlog rose 17% to a record $5.1 billion. Leonardo DRS Announces Second-Quarter Results
• Positive Sentiment: Full-year earnings guidance was raised. DRS increased 2026 adjusted EBITDA guidance to $525 million-$540 million from $515 million-$530 million and adjusted EPS guidance to $1.34-$1.39 from $1.26-$1.30. Revenue guidance was maintained at $3.9 billion-$3.975 billion. Leonardo DRS Raises Guidance
• Positive Sentiment: Raft expands DRS’s software capabilities. The company agreed to acquire Raft for $450 million in cash, adding artificial intelligence, data fusion and mission-software technologies that could support longer-term growth in multi-domain defense programs. Leonardo DRS to Acquire Raft
• Neutral Sentiment: DRS declared another quarterly dividend of $0.09 per share, payable August 27 to shareholders of record August 13. The payout supports shareholder returns but represents a modest approximately 0.8% annual yield. Leonardo DRS Earnings Information
• Negative Sentiment: The $450 million all-cash Raft purchase is not included in current guidance and could reduce cash or require additional financing; DRS reported $270 million of cash at quarter-end. Investors may also view the stock’s elevated valuation, with a P/E above 40, as leaving limited room for execution disappointments.

About Leonardo DRS

Leonardo DRS is a U.S.-based defense technology company and wholly owned subsidiary of Italy’s Leonardo S.p.A. The firm specializes in developing and integrating mission-critical systems for military and government customers, with a primary focus on command, control, communications, computers, intelligence, surveillance and reconnaissance (C4ISR). Its core offerings encompass advanced sensors, targeting systems, radars and electronic warfare solutions designed to enhance situational awareness and operational effectiveness across land, sea and air domains.

The company’s portfolio includes naval combat management systems, unmanned vehicle sensors, power generation and distribution equipment, and training and simulation solutions.