Leonardo DRS (NASDAQ:DRS) vs. VSE (NASDAQ:VSEC) Head to Head Analysis

Leonardo DRS (NASDAQ:DRS) and VSE (NASDAQ:VSEC) are both mid-cap industrials companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, institutional ownership, valuation, profitability, analyst recommendations, earnings and dividends.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Leonardo DRS and VSE, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Leonardo DRS	0	2	5	3	3.10
VSE	0	5	7	1	2.69

Leonardo DRS currently has a consensus target price of $51.50, indicating a potential upside of 51.29%. VSE has a consensus target price of $254.00, indicating a potential upside of 46.98%. Given Leonardo DRS’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Leonardo DRS is more favorable than VSE.

Dividends

Leonardo DRS pays an annual dividend of $0.36 per share and has a dividend yield of 1.1%. VSE pays an annual dividend of $0.40 per share and has a dividend yield of 0.2%. Leonardo DRS pays out 26.5% of its earnings in the form of a dividend. VSE pays out 9.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Insider & Institutional Ownership

18.8% of Leonardo DRS shares are held by institutional investors. Comparatively, 91.5% of VSE shares are held by institutional investors. 0.3% of Leonardo DRS shares are held by insiders. Comparatively, 1.8% of VSE shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Leonardo DRS and VSE’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Leonardo DRS	9.40%	14.33%	9.29%
VSE	7.87%	7.10%	5.00%

Valuation & Earnings

This table compares Leonardo DRS and VSE”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Leonardo DRS	$3.65 billion	2.49	$278.00 million	$1.36	25.03
VSE	$1.11 billion	4.36	$11.70 million	$4.42	39.10

Leonardo DRS has higher revenue and earnings than VSE. Leonardo DRS is trading at a lower price-to-earnings ratio than VSE, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Leonardo DRS has a beta of 0.37, suggesting that its stock price is 63% less volatile than the S&P 500. Comparatively, VSE has a beta of 1.26, suggesting that its stock price is 26% more volatile than the S&P 500.

Summary

Leonardo DRS beats VSE on 9 of the 17 factors compared between the two stocks.

About Leonardo DRS

Leonardo DRS, Inc., together with its subsidiaries, provides defense electronic products and systems, and military support services. It operates through Advanced Sensing and Computing (ASC) segment, and Integrated Mission Systems (IMS) segments. The ASC segment designs, develops, and manufacture sensing and network computing technology that enables real-time situational awareness required for enhanced operational decision making and execution; and offers sensing capabilities span applications, such as missions requiring advanced detection, precision targeting and surveillance sensing, long range electro-optic/infrared, signals intelligence, and other intelligence systems including electronic warfare, ground vehicle sensing, active electronically scanned array tactical radars, dismounted soldier, and space sensing. This segment also provides network computing, which are utilized across a range of mission applications including platform computing on ground and shipboard for advanced battle management, combat systems, radar, command and control, tactical networks, tactical computing, and communications. The IMS segment designs, develops, manufacture, and integrates power conversion, control, and distribution systems, ship propulsion systems, motors and variable frequency drives, force protection systems, transportation, and logistics systems for the U.S. and allied defense customers. This segment also offers electrical propulsion systems, which includes power conversion, control, distribution, and propulsion systems, as well as power dense permanent magnet motors, energy storage systems and associated efficient, rugged, and compact power conversion, electrical actuation systems, as well as cooling technologies; and motor controllers, instrumentation and control equipment, electrical actuation systems, and thermal management systems. The company was incorporated in 1968 and is based in Arlington, Virginia. Leonardo DRS, Inc. operates as a subsidiary of Leonardo S.p.A.

About VSE

VSE Corporation operates as a diversified aftermarket products and services company in the United States. The company operates through two segments, Aviation and Fleet. The Aviation segment provides aftermarket parts supply and distribution; maintenance, repair, and overhaul services for components and engine accessories supporting commercial, business, and general aviation operators. This segment serves commercial airlines, regional airlines, cargo transporters, MRO integrators and providers, aviation manufacturers, corporate and private aircraft owners, and fixed-base operators. The Fleet segment offers parts supply, inventory management, e-commerce fulfillment, logistics, supply chain support, and other services to support the commercial aftermarket medium- and heavy-duty truck market. This segment also provides sale of vehicle parts and supply chain services to support client truck fleets, as well as sustainment solutions and managed inventory services to government and commercial truck fleets. VSE Corporation was incorporated in 1959 and is headquartered in Alexandria, Virginia.