Leonardo DRS (NASDAQ:DRS) Announces Quarterly Earnings Results

Key Points

• Leonardo DRS exceeded third-quarter expectations: Adjusted EPS rose 59% year over year to $0.46, topping the $0.35 consensus, while revenue increased 11% to $1.07 billion.
• Bookings and backlog reached record levels: Bookings totaled $1.64 billion, producing a 1.5x book-to-bill ratio and lifting funded backlog 21% to $5.64 billion.
• Management raised its 2026 outlook: The company now expects $3.95–$3.985 billion in revenue, $545–$555 million in adjusted EBITDA and $1.50–$1.53 in adjusted EPS, though the guidance excludes the pending Raft acquisition and cash flow declined year over year.

Leonardo DRS (NASDAQ:DRS - Get Free Report) posted its quarterly earnings data on Thursday. The company reported $0.46 earnings per share (EPS) for the quarter, topping the consensus estimate of $0.35 by $0.11, Zacks reports. The company had revenue of $1.07 billion for the quarter, compared to the consensus estimate of $1.03 billion. Leonardo DRS had a net margin of 8.52% and a return on equity of 12.97%. The business's revenue was up 11.0% compared to the same quarter last year. During the same quarter in the previous year, the firm posted $0.29 EPS.

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

• Strong third-quarter execution drove $1.1 billion of revenue, up 11% year over year, 14% adjusted EBITDA margins, and adjusted diluted EPS of $0.46, up 59%.
• Bookings exceeded $1.6 billion with a 1.5x book-to-bill ratio, lifting funded backlog to a record $5.6 billion and providing substantial revenue visibility.
• Management raised and narrowed 2026 guidance to $3.95–$3.985 billion of revenue, $545–$555 million of adjusted EBITDA, and $1.50–$1.53 of adjusted EPS; IMS margins are expected to sustain around 16%, while ASC is expected to continue expanding.
• Demand remains strong across tactical radars, counter-drone systems, space sensing, and naval electric propulsion, including a $500 million counter-drone contract framework and the KDDX destroyer award in South Korea; management expects radar growth to outpace its broader 2027 framework.
• The all-cash Raft acquisition is still expected to close in the fourth quarter and be accretive in its first full year, but is excluded from 2026 guidance; elevated fourth-quarter capital expenditures are expected to bring full-year CapEx to roughly 4% of revenue.

Leonardo DRS Price Performance

Shares of Leonardo DRS stock traded up $4.51 during trading on Thursday, hitting $40.01. 990,168 shares of the company's stock traded hands, compared to its average volume of 1,075,943. The company has a debt-to-equity ratio of 0.05, a current ratio of 1.92 and a quick ratio of 1.56. The firm's fifty day moving average price is $36.83 and its 200 day moving average price is $42.20. Leonardo DRS has a twelve month low of $32.43 and a twelve month high of $50.59. The company has a market cap of $10.68 billion, a PE ratio of 33.49, a PEG ratio of 2.08 and a beta of 0.32.

Key Leonardo DRS News

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

• Positive Sentiment: Q3 results exceeded expectations: Adjusted EPS was $0.46, ahead of the $0.35-$0.36 consensus range and up from $0.29 a year earlier. Revenue rose 11% to $1.066 billion, surpassing estimates near $1.03 billion. Leonardo DRS Q3 Earnings and Revenues Surpass Estimates
• Positive Sentiment: Profitability accelerated: Net earnings increased 60% to $115 million, while adjusted EBITDA rose 27% to $149 million. Adjusted EBITDA margin expanded to 14.0% from 12.2%, helped by favorable program mix, operating leverage and strong execution. Leonardo DRS Announces Q3 2026 Results
• Positive Sentiment: Backlog and bookings reached records: Quarterly bookings totaled $1.639 billion, producing a 1.5x book-to-bill ratio. Funded backlog climbed 21% year over year to $5.64 billion, improving visibility into future revenue. Demand was led by tactical radars, naval power and propulsion, force protection and space-sensing programs.
• Positive Sentiment: Full-year outlook was raised: Leonardo DRS increased 2026 revenue guidance to $3.95-$3.985 billion, adjusted EBITDA guidance to $545-$555 million and adjusted diluted EPS guidance to $1.50-$1.53. The company also declared a $0.09-per-share dividend payable November 25. Leonardo DRS Raises FY26 Outlook
• Neutral Sentiment: The raised outlook excludes the pending Raft acquisition, leaving potential upside if the transaction closes successfully but also introducing integration and financing considerations.
• Negative Sentiment: Quarterly free cash flow declined to $61 million from $77 million a year earlier, while cash fell to $294 million from $647 million at year-end. Higher working-capital needs and increased investment could constrain near-term cash generation, despite strong year-to-date operating performance.

Insider Activity

In related news, CFO Michael Dippold sold 20,317 shares of the stock in a transaction dated Wednesday, September 2nd. The shares were sold at an average price of $37.18, for a total value of $755,386.06. Following the completion of the transaction, the chief financial officer owned 35,143 shares of the company's stock, valued at $1,306,616.74. This represents a 36.63% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the SEC, which is available at this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, EVP Jason Rinsky sold 3,864 shares of the firm's stock in a transaction dated Tuesday, August 4th. The stock was sold at an average price of $45.81, for a total transaction of $177,009.84. Following the transaction, the executive vice president owned 23,581 shares of the company's stock, valued at approximately $1,080,245.61. This represents a 14.08% decrease in their position. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Corporate insiders own 0.25% of the company's stock.

Wall Street Analysts Forecast Growth

DRS has been the subject of several research reports. Morgan Stanley reduced their target price on shares of Leonardo DRS from $47.00 to $44.00 and set an "equal weight" rating for the company in a research note on Friday, October 16th. Weiss Ratings cut Leonardo DRS from a "buy (b-)" rating to a "hold (c+)" rating in a report on Thursday, October 22nd. JPMorgan Chase & Co. raised their price objective on Leonardo DRS from $48.00 to $53.00 and gave the stock a "neutral" rating in a research report on Friday, July 31st. Oppenheimer started coverage on Leonardo DRS in a research report on Thursday, October 22nd. They issued an "outperform" rating and a $45.00 price objective for the company. Finally, Guggenheim assumed coverage on Leonardo DRS in a research report on Monday, September 14th. They set a "buy" rating and a $51.00 price objective on the stock. Two investment analysts have rated the stock with a Strong Buy rating, three have issued a Buy rating and four have issued a Hold rating to the stock. According to data from MarketBeat.com, the stock presently has an average rating of "Moderate Buy" and a consensus price target of $51.57.

Leonardo DRS Company Profile

Leonardo DRS, Inc is a defense technology company that develops and supplies advanced products and systems for the U.S. military and government customers, as well as allied nations. The company operates as a subsidiary of Leonardo S.p.A. and focuses on technologies used in land, sea, air and space-related defense applications.

Its offerings include sensing and surveillance systems, electro-optical and infrared technologies, radar and electronic warfare products, network computing and communications systems, counter-uncrewed aircraft systems, force protection equipment, and naval power and propulsion systems.

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