Leonardo DRS (NASDAQ:DRS) Share Price Breaks Above 50-Day Moving Average - What's Next?

Key Points

• Leonardo DRS delivered strong third-quarter results: Adjusted EPS rose to $0.46 versus the $0.35 consensus, while revenue increased 11% year over year to $1.07 billion. Net earnings climbed 60% to $115 million and adjusted EBITDA margins expanded to 14.0%.
• Defense demand and future visibility remain robust: Record bookings of $1.6 billion produced a 1.5x book-to-bill ratio, while funded backlog grew 21% to $5.6 billion. The company raised its 2026 revenue, EBITDA and adjusted EPS guidance.
• Shares moved above their 50-day moving average, but risks remain: The stock traded near $39.64 after reaching $40.42, below its $42.20 200-day average. Free cash flow declined due to working-capital needs, and management cited government funding, contract execution and acquisition-integration risks.

Shares of Leonardo DRS, Inc. (NASDAQ:DRS - Get Free Report) crossed above its fifty day moving average during trading on Thursday. The stock has a fifty day moving average of $36.77 and traded as high as $40.42. Leonardo DRS shares last traded at $39.64, with a volume of 2,301,858 shares changing hands.

Leonardo DRS News Roundup

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

• Positive Sentiment: Third-quarter adjusted EPS was $0.46, above the $0.35 consensus estimate, while revenue reached $1.07 billion, exceeding the $1.03 billion estimate. EPS increased from $0.29 and revenue grew 11% year over year. Earnings Flash: Leonardo DRS adjusted EPS
• Positive Sentiment: Profitability improved sharply: net earnings rose 60% to $115 million, adjusted EBITDA increased 27% to $149 million, and adjusted EBITDA margin expanded to 14.0% from 12.2%, supported by favorable product mix, operating leverage, and strong execution. Leonardo DRS third-quarter financial results
• Positive Sentiment: Bookings reached a record $1.6 billion, producing a 1.5x book-to-bill ratio. Funded backlog rose 21% year over year to a record $5.6 billion, improving visibility into future revenue from defense programs including tactical radars, naval power and propulsion, and space sensing.
• Positive Sentiment: Leonardo DRS raised its 2026 outlook. Revenue guidance increased to $3.95-$3.985 billion, adjusted EBITDA guidance to $545-$555 million, and adjusted diluted EPS guidance to $1.50-$1.53. Leonardo DRS raises fiscal 2026 outlook
• Positive Sentiment: The board declared a quarterly dividend of $0.09 per share, payable November 25 to shareholders of record November 12. The company also repurchased approximately $12 million of stock during the quarter.
• Neutral Sentiment: Management’s earnings call emphasized robust defense demand and confidence in the raised outlook, although the guidance excludes the pending Raft acquisition and remains subject to government funding, contract execution, and integration risks.
• Negative Sentiment: Third-quarter free cash flow fell to $61 million from $77 million a year earlier because of higher working-capital needs. Cash declined to $294 million, although the company reported no borrowings under its credit facility and reduced long-term debt.

Analyst Upgrades and Downgrades

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

Leonardo DRS Stock Up 11.7%

The company has a current ratio of 1.92, a quick ratio of 1.56 and a debt-to-equity ratio of 0.05. The firm has a market capitalization of $10.58 billion, a price-to-earnings ratio of 33.31, a PEG ratio of 2.14 and a beta of 0.32. The stock has a fifty day moving average of $36.77 and a 200-day moving average of $42.20.

Leonardo DRS (NASDAQ:DRS - Get Free Report) last released its quarterly earnings results on Thursday, October 29th. The company reported $0.46 earnings per share for the quarter, beating analysts' consensus estimates of $0.35 by $0.11. The business had revenue of $1.07 billion during the quarter, compared to analyst estimates of $1.03 billion. Leonardo DRS had a return on equity of 12.97% and a net margin of 8.52%. Leonardo DRS's revenue for the quarter was up 11.0% on a year-over-year basis. During the same quarter last year, the company posted $0.29 EPS. As a group, sell-side analysts expect that Leonardo DRS, Inc. will post 1.39 EPS for the current year.

Leonardo DRS Dividend Announcement

The company also recently disclosed a quarterly dividend, which will be paid on Wednesday, November 25th. Investors of record on Thursday, November 12th will be paid a $0.09 dividend. The ex-dividend date of this dividend is Thursday, November 12th. This represents a $0.36 dividend on an annualized basis and a yield of 0.9%. Leonardo DRS's dividend payout ratio (DPR) is currently 30.25%.

Insider Buying and Selling at Leonardo DRS

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

Hedge Funds Weigh In On Leonardo DRS

A number of large investors have recently made changes to their positions in the business. BlackRock Inc. bought a new stake in Leonardo DRS in the second quarter worth $212,883,000. Stephens Investment Management Group LLC boosted its holdings in Leonardo DRS by 107.6% during the first quarter. Stephens Investment Management Group LLC now owns 2,118,331 shares of the company's stock valued at $94,308,000 after acquiring an additional 1,098,108 shares during the period. Bank of America Corp DE acquired a new stake in shares of Leonardo DRS in the second quarter valued at about $24,941,000. Connor Clark & Lunn Investment Management Ltd. acquired a new stake in Leonardo DRS in the 2nd quarter valued at approximately $24,857,000. Finally, Bank of New York Mellon Corp grew its stake in shares of Leonardo DRS by 3.1% in the first quarter. Bank of New York Mellon Corp now owns 517,166 shares of the company's stock worth $23,024,000 after acquiring an additional 15,349 shares during the last quarter. Institutional investors and hedge funds own 18.76% of the company's stock.

About Leonardo DRS

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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