Leonardo DRS (NASDAQ:DRS) Announces Earnings Results

Leonardo DRS (NASDAQ:DRS) announced its quarterly earnings results on Thursday. The company reported $0.35 earnings per share for the quarter, beating analysts’ consensus estimates 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 company had revenue of $913.00 million for the quarter, compared to analyst estimates of $903.27 million. During the same quarter last year, the business earned $0.23 EPS. Leonardo DRS’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 Stock Down 0.8%

Shares of Leonardo DRS stock traded down $0.39 during trading hours on Friday, hitting $45.23. 136,300 shares of the company’s stock traded hands, compared to its average volume of 1,121,322. Leonardo DRS has a twelve month low of $32.43 and a twelve month high of $50.59. The company has a market cap of $12.07 billion, a PE ratio of 42.26, a PEG ratio of 3.36 and a beta of 0.36. The company has a quick ratio of 1.52, a current ratio of 1.86 and a debt-to-equity ratio of 0.05. The stock has a 50 day simple moving average of $45.65 and a 200-day simple moving average of $43.90.

Leonardo DRS Announces Dividend

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

Insiders Place Their Bets

In related news, CFO Michael Dippold sold 8,318 shares of the stock in a transaction dated Monday, June 8th. The stock was sold at an average price of $46.48, for a total value of $386,620.64. Following the completion of the transaction, the chief financial officer owned 55,460 shares of the company’s stock, valued at approximately $2,577,780.80. This represents a 13.04% decrease in their ownership of the stock. The sale was disclosed in a document filed with the SEC, which is accessible through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, Director Reuben Jeffery III acquired 25,000 shares of the stock in a transaction on Tuesday, May 19th. The shares were acquired at an average price of $42.77 per share, with a total value of $1,069,250.00. Following the purchase, the director owned 25,000 shares in the company, valued at $1,069,250. This represents a ∞ increase in their ownership of the stock. The disclosure for this purchase is available in the SEC filing. In the last 90 days, insiders have sold 65,364 shares of company stock valued at $2,994,785. Insiders own 0.25% of the company’s stock.

Institutional Trading of Leonardo DRS

Institutional investors have recently added to or reduced their stakes in the stock. Millennium Management LLC increased its position in shares of Leonardo DRS by 152.1% in the 3rd quarter. Millennium Management LLC now owns 1,776,185 shares of the company’s stock worth $80,639,000 after purchasing an additional 1,071,708 shares during the last quarter. AQR Capital Management LLC grew its stake in Leonardo DRS by 528.6% in the third quarter. AQR Capital Management LLC now owns 1,273,444 shares of the company’s stock worth $56,000,000 after purchasing an additional 1,070,870 shares in the last quarter. UBS Group AG increased its holdings in Leonardo DRS by 566.2% in the third quarter. UBS Group AG now owns 711,588 shares of the company’s stock valued at $32,306,000 after buying an additional 604,783 shares during the last quarter. Bank of America Corp DE increased its holdings in Leonardo DRS by 64.6% in the second quarter. Bank of America Corp DE now owns 1,251,415 shares of the company’s stock valued at $58,166,000 after buying an additional 491,158 shares during the last quarter. Finally, Deutsche Bank AG increased its holdings in Leonardo DRS by 203.7% in the fourth quarter. Deutsche Bank AG now owns 530,899 shares of the company’s stock valued at $18,098,000 after buying an additional 356,067 shares during the last quarter. 18.76% of the stock is owned by institutional investors and hedge funds.

Key Stories Impacting Leonardo DRS

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

• Positive Sentiment: Q2 earnings beat expectations. Revenue rose 10% year over year to $913 million, ahead of the $903.3 million consensus estimate, while adjusted EPS increased 52% to $0.35 versus expectations of $0.27. Net earnings climbed 59% to $86 million. Leonardo DRS Announces Financial Results for Second Quarter 2026
• Positive Sentiment: Backlog and profitability strengthened. Bookings totaled $1.1 billion, producing a 1.2x book-to-bill ratio, and funded backlog reached a record $5.1 billion, up 17% year over year. Adjusted EBITDA rose 33% to $128 million, with margin expanding to 14.0%. Leonardo DRS Signs $450M Agreement to Acquire Mission Software Firm Raft
• Positive Sentiment: Full-year guidance was raised. DRS increased 2026 adjusted EPS guidance to $1.34–$1.39 from $1.26–$1.30 and adjusted EBITDA guidance to $525–$540 million. The EPS outlook is above the $1.30 analyst consensus, although the revenue forecast was unchanged at $3.9–$4.0 billion.
• Positive Sentiment: Raft acquisition expands software capabilities. DRS agreed to acquire mission-software company Raft for $450 million, adding artificial intelligence, data fusion and multi-domain software capabilities. The deal could improve DRS’s positioning in higher-growth defense technology markets.
• Neutral Sentiment: Shareholder returns continued. The company declared a quarterly dividend of $0.09 per share, payable August 27, and repurchased approximately $12 million of stock during the quarter.
• Negative Sentiment: Investors may be cautious about transaction execution and cash generation. The guidance increase excludes Raft, leaving integration, financing and potential dilution or leverage impacts to be assessed. First-half free cash flow remained negative at $89 million, despite positive second-quarter free cash flow.

Analyst Upgrades and Downgrades

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

Leonardo DRS Company Profile

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.