Head to Head Survey: Leonardo DRS (NASDAQ:DRS) vs. VSE (NASDAQ:VSEC)

VSE (NASDAQ:VSEC) and Leonardo DRS (NASDAQ:DRS) are both mid-cap industrials companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, earnings, institutional ownership, analyst recommendations, profitability, dividends and risk.

Dividends

VSE pays an annual dividend of $0.40 per share and has a dividend yield of 0.2%. Leonardo DRS pays an annual dividend of $0.36 per share and has a dividend yield of 1.0%. VSE pays out 9.0% of its earnings in the form of a dividend. Leonardo DRS pays out 26.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Risk & Volatility

VSE has a beta of 1.26, indicating that its share price is 26% more volatile than the S&P 500. Comparatively, Leonardo DRS has a beta of 0.37, indicating that its share price is 63% less volatile than the S&P 500.

Earnings & Valuation

This table compares VSE and Leonardo DRS”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
VSE	$1.62 billion	3.23	$11.70 million	$4.42	42.11
Leonardo DRS	$3.88 billion	2.46	$278.00 million	$1.36	26.35

Leonardo DRS has higher revenue and earnings than VSE. Leonardo DRS is trading at a lower price-to-earnings ratio than VSE, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current recommendations and price targets for VSE and Leonardo DRS, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
VSE	0	4	8	1	2.77
Leonardo DRS	0	2	5	3	3.10

VSE currently has a consensus target price of $254.00, suggesting a potential upside of 36.46%. Leonardo DRS has a consensus target price of $50.88, suggesting a potential upside of 41.97%. Given Leonardo DRS’s stronger consensus rating and higher possible upside, analysts clearly believe Leonardo DRS is more favorable than VSE.

Profitability

This table compares VSE and Leonardo DRS’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
VSE	7.87%	7.10%	5.00%
Leonardo DRS	9.40%	14.33%	9.29%

Insider and Institutional Ownership

91.5% of VSE shares are owned by institutional investors. Comparatively, 18.8% of Leonardo DRS shares are owned by institutional investors. 1.8% of VSE shares are owned by company insiders. Comparatively, 0.3% of Leonardo DRS shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

Leonardo DRS beats VSE on 9 of the 17 factors compared between the two stocks.

About VSE

VSE is an aftermarket aviation services and parts provider. The company distributes replacement parts and supplies repair, maintenance, and other support services for commercial, business, and general aviation customers. Its aviation business works with airlines, aircraft operators, maintenance providers, and original equipment manufacturers to help keep aircraft and related components in service. VSE serves customers in the United States and international markets. Founded in 1959, VSE began as a provider of engineering and technical services to the U.S. government and later expanded into aviation aftermarket services.

About Leonardo DRS

Leonardo DRS, Inc. is a U.S.-based defense technology company and a subsidiary of the Italian aerospace and defense group Leonardo S.p.A. It develops and supplies advanced products and services for the U.S. military and other government and commercial customers. The company’s offerings include naval power and propulsion systems, combat and mission systems, electro-optical and infrared sensors, electronic warfare and communications equipment, and computing and networking technologies. Its products support operations across maritime, land, air and space domains.