Leonardo DRS (NASDAQ:DRS) Issues Quarterly Earnings Results, Beats Estimates By $0.08 EPS

Leonardo DRS (NASDAQ:DRS) released its earnings results on Thursday. The company reported $0.35 EPS for the quarter, beating analysts’ consensus estimates of $0.27 by $0.08, FiscalAI reports. Leonardo DRS had a return on equity of 13.07% and a net margin of 8.52%.The business had revenue of $913.00 million for the quarter, compared to analysts’ expectations of $903.27 million. During the same quarter in the prior year, the firm earned $0.23 earnings per share. The firm’s revenue 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 Stock Performance

Shares of DRS stock opened at $46.05 on Friday. The firm has a market capitalization of $12.28 billion, a price-to-earnings ratio of 38.70, a PEG ratio of 3.29 and a beta of 0.36. The stock has a fifty day moving average of $45.67 and a 200 day moving average of $43.91. Leonardo DRS has a 52 week low of $32.43 and a 52 week high of $50.59. The company has a quick ratio of 1.52, a current ratio of 1.86 and a debt-to-equity ratio of 0.05.

Leonardo DRS Announces Dividend

The company also recently announced a quarterly dividend, which will be paid on Thursday, August 27th. Stockholders 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 dividend yield of 0.8%. The ex-dividend date is Thursday, August 13th. Leonardo DRS’s dividend payout ratio is currently 30.25%.

Insider Buying and Selling at Leonardo DRS

In other news, CEO John Baylouny sold 36,471 shares of Leonardo DRS stock in a transaction dated Thursday, June 18th. The stock was sold at an average price of $45.67, for a total value of $1,665,630.57. Following the completion of the transaction, the chief executive officer owned 122,435 shares of the company’s stock, valued at $5,591,606.45. The trade was a 22.95% decrease in their position. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is available through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, EVP Sally Wallace sold 1,300 shares of the company’s stock in a transaction that occurred on Thursday, June 11th. The stock was sold at an average price of $50.00, for a total transaction of $65,000.00. Following the completion of the transaction, the executive vice president owned 57,053 shares in the company, valued at approximately $2,852,650. This represents a 2.23% 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. In the last 90 days, insiders sold 65,364 shares of company stock worth $2,994,785. Insiders own 0.25% of the company’s stock.

Hedge Funds Weigh In On Leonardo DRS

A number of hedge funds have recently added to or reduced their stakes in DRS. Fox Run Management L.L.C. raised its stake in shares of Leonardo DRS by 32.1% in the fourth quarter. Fox Run Management L.L.C. now owns 12,734 shares of the company’s stock worth $434,000 after purchasing an additional 3,096 shares during the last quarter. Mercer Global Advisors Inc. ADV bought a new position in shares of Leonardo DRS during the third quarter valued at $429,000. Graham Capital Management L.P. purchased a new stake in shares of Leonardo DRS during the fourth quarter valued at $372,000. Amundi bought a new stake in Leonardo DRS in the 2nd quarter worth about $343,000. Finally, Numerai GP LLC bought a new stake in Leonardo DRS in the 4th quarter worth about $305,000. 18.76% of the stock is currently owned by hedge funds and other institutional investors.

More Leonardo DRS News

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

• Positive Sentiment: Q2 earnings beat expectations: Adjusted EPS was $0.35 versus the $0.27 analyst consensus, while revenue rose 10% year over year to $913 million, exceeding estimates of $903.3 million. Net earnings increased 59% to $86 million, and adjusted EBITDA climbed 33% to $128 million. Leonardo DRS Announces Financial Results for Second Quarter 2026
• Positive Sentiment: Guidance was raised: Leonardo DRS increased its 2026 adjusted EPS outlook to $1.34-$1.39 from $1.26-$1.30, above the $1.30 consensus estimate. Adjusted EBITDA guidance was also raised to $525 million-$540 million, although revenue guidance was unchanged at $3.9 billion-$4.0 billion. Leonardo DRS 2026 Guidance and Raft Acquisition
• Positive Sentiment: Backlog and bookings support future growth: Quarterly bookings reached $1.1 billion, producing a 1.2x book-to-bill ratio, while funded backlog rose 17% year over year to a record $5.1 billion. Growth was led by tactical radar, infrared sensing, electric power and propulsion, and naval computing programs.
• Positive Sentiment: Raft acquisition expands software capabilities: DRS agreed to acquire Raft for $450 million, adding expertise in artificial intelligence, data fusion, and mission software. The deal could strengthen DRS’s position in multi-domain defense technology. Leonardo DRS Signs Agreement to Acquire Raft
• Neutral Sentiment: JPMorgan raised its price target to $53 from $48 but retained a Neutral rating. The higher target signals improved valuation potential, but the unchanged rating suggests limited conviction at the current valuation. Benzinga Price Target Update
• Negative Sentiment: Acquisition execution and funding remain risks: Raft is expected to require substantial capital, and the transaction faces closing, integration, regulatory, and potential debt-related risks. Management’s 2026 guidance excludes Raft’s contribution.

Wall Street Analyst Weigh In

Several equities analysts have recently commented on DRS shares. JPMorgan Chase & Co. increased their price objective on Leonardo DRS from $48.00 to $53.00 and gave the company a “neutral” rating in a research report on Friday. Wall Street Zen upgraded Leonardo DRS from a “hold” rating to a “buy” rating in a research report on Sunday, May 10th. Weiss Ratings raised Leonardo DRS from a “hold (c)” rating to a “hold (c+)” rating in a research note on Thursday, July 23rd. 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 report on Wednesday, May 6th. Finally, Truist Financial raised shares of Leonardo DRS to a “strong-buy” rating in a research note on Friday, May 1st. One research analyst has rated the stock with a Strong Buy rating, two have assigned a Buy rating and three have assigned a Hold rating to the company’s stock. According to MarketBeat, the stock presently has an average rating of “Moderate Buy” and a consensus target price of $53.60.

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.