Leonardo DRS (NASDAQ:DRS) Issues Quarterly Earnings Results

Leonardo DRS (NASDAQ:DRS) announced its quarterly earnings data on Thursday. The company reported $0.35 EPS for the quarter, topping 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 for the quarter, compared to analyst estimates of $902.19 million. During the same quarter in the previous year, the firm posted $0.23 earnings per share. The company’s revenue for the quarter 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 Price Performance

Shares of DRS traded down $0.92 during mid-day trading on Thursday, reaching $45.62. 1,175,299 shares of the stock traded hands, compared to its average volume of 1,128,365. The company has a market cap 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. Leonardo DRS has a 1 year low of $32.43 and a 1 year high of $50.59. The firm has a fifty day moving average price of $45.65 and a 200 day moving average price of $43.90. The company has a current ratio of 1.86, a quick ratio of 1.52 and a debt-to-equity ratio of 0.05.

Leonardo DRS Dividend Announcement

The company also recently declared a quarterly dividend, which will be paid on Thursday, August 27th. Shareholders of record on Thursday, August 13th will be issued a $0.09 dividend. This represents a $0.36 annualized dividend and a yield of 0.8%. The ex-dividend date of this dividend is Thursday, August 13th. Leonardo DRS’s dividend payout ratio (DPR) is presently 33.64%.

Analyst Upgrades and Downgrades

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

Leonardo DRS News Roundup

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.

Insider Activity at Leonardo DRS

In related news, CFO Michael Dippold sold 8,318 shares of the business’s stock in a transaction dated Monday, June 8th. The stock was sold at an average price of $46.48, for a total transaction of $386,620.64. Following the completion of the transaction, the chief financial officer directly owned 55,460 shares in the company, valued at $2,577,780.80. The trade was a 13.04% decrease in their ownership of the stock. The transaction was disclosed in a filing with the Securities & Exchange Commission, which is available through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, EVP Jason Rinsky sold 3,865 shares of the firm’s stock in a transaction dated Tuesday, July 7th. The shares were sold at an average price of $45.37, for a total value of $175,355.05. Following the completion of the sale, the executive vice president directly owned 27,445 shares in the company, valued at approximately $1,245,179.65. The trade was a 12.34% 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. Insiders have sold 65,364 shares of company stock valued at $2,994,785 in the last ninety days. 0.25% of the stock is currently owned by corporate insiders.

Institutional Trading of Leonardo DRS

Several institutional investors and hedge funds have recently made changes to their positions in the stock. State Street Corp increased its stake in Leonardo DRS by 4.0% in the fourth quarter. State Street Corp now owns 3,988,403 shares of the company’s stock valued at $135,965,000 after acquiring an additional 153,697 shares during the last quarter. AQR Capital Management LLC boosted its holdings in shares of Leonardo DRS by 77.1% in the 4th quarter. AQR Capital Management LLC now owns 2,255,400 shares of the company’s stock worth $76,887,000 after purchasing an additional 981,956 shares in the last quarter. Dimensional Fund Advisors LP raised its holdings in shares of Leonardo DRS by 15.5% during the 4th quarter. Dimensional Fund Advisors LP now owns 1,995,989 shares of the company’s stock valued at $68,043,000 after buying an additional 267,817 shares in the last quarter. Millennium Management LLC raised its holdings in shares of Leonardo DRS by 6.3% during the 4th quarter. Millennium Management LLC now owns 1,887,797 shares of the company’s stock valued at $64,355,000 after buying an additional 111,612 shares in the last quarter. Finally, Geode Capital Management LLC lifted its position in Leonardo DRS by 1.1% in the 4th quarter. Geode Capital Management LLC now owns 1,610,691 shares of the company’s stock worth $54,923,000 after buying an additional 17,812 shares during the last quarter. Hedge funds and other institutional investors own 18.76% of the company’s stock.

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.