Leonardo DRS (NASDAQ:DRS) Issues Quarterly Earnings Results

Leonardo DRS (NASDAQ:DRS) issued its quarterly earnings data on Thursday. The company reported $0.35 earnings per share 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 firm had revenue of $913.00 million for the quarter, compared to analysts’ expectations of $902.19 million. During the same period in the prior year, the firm earned $0.23 earnings per share. The company’s quarterly revenue was up 10.1% compared to the same quarter last year. 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 Trading Down 2.0%

Shares of Leonardo DRS stock traded down $0.92 on Thursday, hitting $45.62. 1,175,299 shares of the company’s stock traded hands, compared to its average volume of 1,128,365. The firm’s 50-day moving average price is $45.65 and its two-hundred day moving average price is $43.90. The stock has a market capitalization of $12.17 billion, a PE ratio of 42.64, a price-to-earnings-growth ratio of 3.55 and a beta of 0.36. Leonardo DRS has a one year low of $32.43 and a one year high of $50.59. The company has a debt-to-equity ratio of 0.05, a current ratio of 1.86 and a quick ratio of 1.52.

Leonardo DRS Announces Dividend

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

Analyst Upgrades and Downgrades

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

Key Headlines Impacting Leonardo DRS

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.

Insiders Place Their Bets

In related news, CEO John Baylouny sold 36,471 shares of Leonardo DRS stock in a transaction on Thursday, June 18th. The stock was sold at an average price of $45.67, for a total transaction of $1,665,630.57. Following the completion of the sale, the chief executive officer directly owned 122,435 shares of the company’s stock, valued at $5,591,606.45. The trade was a 22.95% decrease in their ownership of the stock. The sale was disclosed in a document filed with the Securities & Exchange Commission, which is available at this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, Director Reuben Jeffery III bought 25,000 shares of the business’s stock in a transaction on Tuesday, May 19th. The stock was bought at an average cost of $42.77 per share, for a total transaction of $1,069,250.00. Following the purchase, the director directly owned 25,000 shares of the company’s stock, valued at approximately $1,069,250. This trade represents a ∞ increase in their position. The SEC filing for this purchase provides additional information. Insiders sold 65,364 shares of company stock worth $2,994,785 over the last three months. Insiders own 0.25% of the company’s stock.

Institutional Investors Weigh In On Leonardo DRS

Hedge funds and other institutional investors have recently added to or reduced their stakes in the business. MIRAE ASSET GLOBAL ETFS HOLDINGS Ltd. lifted its position in Leonardo DRS by 4.6% during the 1st quarter. MIRAE ASSET GLOBAL ETFS HOLDINGS Ltd. now owns 43,817 shares of the company’s stock worth $1,441,000 after buying an additional 1,922 shares in the last quarter. Millennium Management LLC increased its position in shares of Leonardo DRS by 29.0% in the first quarter. Millennium Management LLC now owns 369,749 shares of the company’s stock valued at $12,157,000 after acquiring an additional 83,077 shares during the last quarter. UBS AM A Distinct Business Unit of UBS Asset Management Americas LLC raised its holdings in Leonardo DRS by 9.4% during the first quarter. UBS AM A Distinct Business Unit of UBS Asset Management Americas LLC now owns 148,474 shares of the company’s stock worth $4,882,000 after acquiring an additional 12,712 shares in the last quarter. Intech Investment Management LLC raised its holdings in Leonardo DRS by 18.6% during the first quarter. Intech Investment Management LLC now owns 48,560 shares of the company’s stock worth $1,597,000 after acquiring an additional 7,625 shares in the last quarter. Finally, Acadian Asset Management LLC acquired a new position in Leonardo DRS during the first quarter valued at approximately $225,000. 18.76% of the stock is currently owned by institutional investors and hedge funds.

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.