Upside case
Bull case
$112+168.2%
DRS would need investors to value it at roughly 89x earnings — about 56x more generous than today's 33x forward P/E. That requires meaningful multiple expansion on top of continued earnings growth.
Analysis OverviewBuyUpdated May 1, 2026
Leonardo DRS, Inc. (DRS) Stock Analysis
Wall Street verdict, consensus price target, and analyst rating breakdown — everything needed to frame the risk/reward at today's price.
Analyst consensus
Buy
Covering
9
analysts
7 bullish · 0 bearish · 9 covering DRS
Strong Buy
0
Buy
7
Hold
2
Sell
0
Strong Sell
0
Consensus Target
$53
+26.8% vs today
Scenario Range
$23 – $112
Model bear to bull value window
Coverage
9
Published analyst ratings
Valuation Context
33.3x
Forward P/E · Market cap $11.1B
DRS price targets
Three scenarios for where DRS stock could go
Current
~$42
Confidence
57 / 100
Updated
May 1, 2026
Where we are now
Current · $42
Bear
$23
Base
$54
Bull
$112
Market caseClosest to today
Base case
$54+28.2%
At 43x on FY1 earnings, the base case reflects a reasonable but not stretched valuation. It prices in continued growth without assuming an exceptional setup.
Stress case
Bear case
$23-44.7%
If investor confidence fades or macro conditions deteriorate, a 15x multiple contraction could push DRS down roughly 45% from where it trades now.
Not financial advice. Model confidence reflects internal scenario assumptions, not a guarantee of returns. Past performance does not predict future results.
Leonardo DRS, Inc.
DRS · NASDAQIndustrialsAerospace & DefenseDecember year-end
Leonardo DRS is a defense technology company that develops advanced sensing, computing, and mission systems for military applications across land, air, sea, and space domains. It generates revenue primarily through two segments—Advanced Sensing and Computing (~60% of sales) and Integrated Mission Systems (~40%)—selling everything from infrared sensors and electronic warfare systems to power distribution and propulsion technologies. The company's moat lies in its deep integration with major defense platforms—particularly naval vessels and ground vehicles—and its long-term relationships with the U.S. Department of Defense and allied governments.
Market Cap
$11.1B
Revenue TTM
$3.7B
Net Income TTM
$290M
Net Margin
7.8%
DRS Revenue and Earnings Performance
Quarterly beat-or-miss track record against analyst estimates, plus forward revenue and EPS outlook for the next two fiscal years.
EPS Beat Rate
100%Exceptional
12 quarters tracked
Revenue Beat Rate
58%Exceptional
vs consensus estimates
Avg EPS Surprise
+17.7%
above Street consensus
Beat / Miss Record
BeatMissLeft = EPS · Right = Revenue
Q3 2025
Q4 2025
Q1 2026
Q2 2026
Last 4 Quarters
EPS beats: 4 of 4Q3 2025
EPS
$0.23/$0.22
Revenue
$829M/$906M
Q4 2025
EPS
$0.29/$0.28
Revenue
$960M/$996M
Q1 2026
EPS
$0.42/$0.37
Revenue
$1.1B/$995M
Q2 2026
EPS
$0.26/$0.21
Revenue
$846M/$825M
| Quarter | EPS (Actual / Est) | EPS Surprise | Revenue (Actual / Est) | Rev Surprise |
|---|---|---|---|---|
| Q3 2025 | $0.23/$0.22 | +4.5% | $829M/$906M | -8.5% |
| Q4 2025 | $0.29/$0.28 | +3.6% | $960M/$996M | -3.7% |
| Q1 2026 | $0.42/$0.37 | +13.5% | $1.1B/$995M | +6.5% |
| Q2 2026 | $0.26/$0.21 | +23.8% | $846M/$825M | +2.5% |
FY1–FY2 Estimates
Revenue Outlook
FY1
$4.1B
+9.7% YoY
FY2
$4.5B
+10.3% YoY
EPS Outlook
FY1
$1.20
— YoY
FY2
$1.32
+9.7% YoY
Trailing FCF (TTM)$397M
FCF Margin: 10.7%
Next Earnings
—
Expected EPS
—
Expected Revenue
—
DRS beat EPS estimates in 4 of 4 tracked quarters. A perfect track record raises the bar for the upcoming report.
DRS Revenue Breakdown by Segment
Product and geographic revenue mix from the latest annual disclosure, with year-over-year growth by segment.
Latest disclosure
FY 2024
Total disclosed revenue $1.1B
Product Mix
Latest annual revenue by segment or product family
Integrated Mission Systems Segment
100.0%
YoY unavailable
Tap, hover, or focus a slice to inspect segment detail.
Geographic Mix
Latest annual revenue by reported region
Segment breakdown not available for this company.
Integrated Mission Systems Segment is the largest disclosed segment at 100.0% of FY 2024 revenue, with no year-over-year comparison yet.
DRS Valuation Snapshot
Current multiples compared to the S&P 500, the company's sector, and its own five-year average.
Relative Value Signal
Significantly Overvalued
Fair value est. $27 — implies -33.7% from today's price.
Premium to Fair Value
33.7%
above fair value
Deep DiscountFair ValueVery Expensive
vs S&P 500 Trailing P/E
DRS
40.6x
vs
S&P 500
25.2x
+61% premium
vs Industrials Trailing P/E
DRS
40.6x
vs
Industrials
25.9x
+57% premium
vs DRS 5Y Avg P/E
Today
40.6x
vs
5Y Average
24.1x
+68% premium
Forward PE
33.3x
S&P 500
19.1x
+75%
Industrials
20.8x
+60%
5Y Avg
—
—
Trailing PE
40.6x
S&P 500
25.2x
+61%
Industrials
25.9x
+57%
5Y Avg
24.1x
+68%
PEG Ratio
3.23x
S&P 500
1.75x
+85%
Industrials
1.59x
+103%
5Y Avg
—
—
EV/EBITDA
24.8x
S&P 500
15.3x
+63%
Industrials
13.9x
+79%
5Y Avg
13.9x
+78%
Price/FCF
49.0x
S&P 500
21.3x
+130%
Industrials
20.6x
+137%
5Y Avg
33.7x
+45%
Price/Sales
3.0x
S&P 500
3.1x
-3%
Industrials
1.6x
+92%
5Y Avg
1.7x
+78%
Dividend Yield
0.85%
S&P 500
1.88%
-54%
Industrials
1.24%
-31%
5Y Avg
7.73%
-89%
| Metric | DRS | S&P 500 | Industrials | 5Y Avg DRS |
|---|---|---|---|---|
| Forward PE | 33.3x | 19.1x+75% | 20.8x+60% | — |
| Trailing PE | 40.6x | 25.2x+61% | 25.9x+57% | 24.1x+68% |
| PEG Ratio | 3.23x | 1.75x+85% | 1.59x+103% | — |
| EV/EBITDA | 24.8x | 15.3x+63% | 13.9x+79% | 13.9x+78% |
| Price/FCF | 49.0x | 21.3x+130% | 20.6x+137% | 33.7x+45% |
| Price/Sales | 3.0x | 3.1x | 1.6x+92% | 1.7x+78% |
| Dividend Yield | 0.85% | 1.88% | 1.24% | 7.73% |
DRS trades above S&P 500 benchmarks on 5 of 6 measured multiples — commands a broad premium across most valuation dimensions.
Forward P/E and PEG reflect analyst consensus estimates. Historical averages use trailing ratios where forward data is unavailable.S&P 500 and sector benchmarks both use trailing median P/E — similar readings indicate the broader index and sector are priced alike.
Open valuation toolDRS Financial Health
Verdict
Strong
DRS generates $397M in free cash flow at a 10.7% margin — 10.5% ROIC signals a durable competitive advantage · returns 1.2% of market cap to shareholders annually.
Cash Engine
Revenue, margins, and cash generation
Revenue (TTM)
Trailing-twelve-month sales base
$3.7B
Revenue Growth
TTM vs prior year
+10.5%
Gross Margin
Gross profit as a share of revenue
24.2%
Operating Margin
Operating income divided by revenue
9.9%
Net Margin
Net income divided by revenue
7.8%
EPS (TTM)
Diluted earnings per share, trailing twelve months
$1.08
Free Cash Flow (TTM)
Cash generation after capex
$397M
FCF Margin
FCF as share of revenue — the primary cash quality signal
10.7%
Capital Quality
ROIC, leverage, and debt serviceability
ROIC
Return on invested capital — primary competitive quality signal
10.5%
ROA
Return on assets, trailing twelve months
6.8%
Cash & Equivalents
Liquid assets on the balance sheet
$647M
Net Cash
Cash exceeds total debt — no net leverage
$177M
Debt Serviceability
Net debt as a multiple of annual free cash flow
Net cash ✓
ROE
Return on equity, trailing twelve months
10.8%
Shareholder Returns
How capital is returned to owners
Total shareholder yield
1.2%
Dividend
0.9%
Buyback
0.3%
Share Repurchases
Trailing buyback outflow — dollar magnitude of capital returned
$35M
Dividend / Share
Annualized trailing dividend per share
$0.36
Payout Ratio
Share of earnings distributed as dividends
34.5%
Shares Outstanding
Declining as buybacks retire shares
266M
All figures from the trailing twelve months. ROIC uses invested capital (equity + net debt).
Open full ratios pageDRS Stock Risk Factors
Key factors that could pressure the stock price, compress the multiple, or weigh on future results.
AI analysis · updated April 29, 2026
High Risk
History of Losses
DRS has recently achieved profitability, but there is a significant risk that it may not sustain this profitability due to its limited history of operating at its current scale and complexity.
High Risk
Dependence on Third-Party Providers
The company's reliance on third-party data, technology, and infrastructure poses a high risk. Any failure to maintain these relationships or changes in their services could severely impact operations and revenue.
High Risk
Cybersecurity Threats
DRS is vulnerable to cyberattacks and data breaches, which could disrupt services and significantly harm its financial condition and operational results.
High Risk
Government Contracts Risks
A substantial portion of DRS's revenue is derived from U.S. government contracts. Changes in federal defense budgets, procurement priorities, or government shutdowns could materially affect the business.
Medium
Valuation Concerns
Analyses indicate that DRS's current valuation may be high, with P/E ratios exceeding industry averages. This situation could leave less room for error if market sentiment shifts.
Medium
Insider Selling
Significant open-market selling by key executives has been noted, indicating negative insider sentiment, which could pose a risk to stock performance.
Medium
Supply Chain Disruptions
Challenges in the supply chain, particularly for critical materials like germanium and rare earths, pose a risk to operational continuity and could pressure margins.
Lower
Acquisition Integration Challenges
Integrating acquired companies can divert management focus and resources, presenting potential cultural challenges that may impact overall performance.
These are risk mechanisms, not predictions. The key question is which would force a cut to earnings estimates or a lower multiple than the market currently prices in.
Why DRS Stock Could Outperform
Structural drivers behind the upside case and why the stock could outperform over the next 12 months.
AI analysis · updated April 29, 2026
Record Backlog and Bookings
DRS has achieved a record backlog of $8.9 billion, reflecting an 8% year-over-year increase in total bookings to $1.3 billion. This substantial backlog provides a strong foundation for future revenue and growth.
Growth in Key Segments
The Advanced Sensing and Computing segment has been a significant growth driver, with a 24% year-over-year increase in new funded bookings in Q3/25. The Integrated Mission Systems segment also showed robust demand, with a 34% top-line growth.
Operational Leverage and Margin Improvement
The company has demonstrated improved EBITDA margins, with a 120 basis point year-over-year increase due to operational leverage and enhanced profitability from critical programs. This suggests efficient operations and a positive long-term outlook.
Strategic Positioning
DRS operates in a specialized niche of defense electronics, focusing on mission-critical subsystems like advanced infrared sensing, electric propulsion for submarines, and space-based tracking. Its economic moat is built on technological leadership, long-term security clearances, and embedded program knowledge.
Global Military Modernization
The company is benefiting from global increases in digitization and modernization of military forces, which drives demand for its proprietary solutions in network computing, electronic warfare, and electric propulsion. This trend is expected to support higher average selling prices and expanded platform content.
Strong Fundamentals
DRS exhibits strong fundamental growth and financial steadiness, with a very solid balance sheet characterized by a low Debt-to-Equity ratio. This financial stability positions the company well for future growth opportunities.
A real bull case compounds — each driver matters most when it strengthens margins, supports capital returns, and keeps the company above the market's minimum growth bar simultaneously.
DRS Stock Price Performance
52-week range context and price returns across multiple time horizons. Dividend contribution is shown separately in the Capital Return section.
Current Price
$41.79
52W Range Position
55%
52-Week Range
Current price plotted between the 52-week low and high.
52-Week Low
$32.43
+28.9% from the low
52-Week High
$49.31
-15.3% from the high
1 Month
-10.57%
3 Month
+7.35%
YTD
+20.2%
1 Year
+0.8%
3Y CAGR
+38.4%
5Y CAGR
+27.6%
10Y CAGR
+49.7%
Range context matters because valuation compression and earnings misses rarely hit from the same starting point. A stock already far below its high can still fall, but it is no longer carrying the same embedded optimism as one pressing a fresh peak.
DRS vs Peers
Valuation, growth, and margin comparison against the closest publicly traded peers for this company.
Peer Set
Accurate peer set
Forward PE
33.3x
vs 52.8x median
-37% below peer median
Revenue Growth
+9.7%
vs +11.0% median
-11% below peer median
Net Margin
7.8%
vs 2.9% median
+175% above peer median
| Company | Mkt Cap | Fwd PE | Rev Grw | Margin | Rating | Upside |
|---|---|---|---|---|---|---|
DRS DRS Leonardo DRS, Inc. | $11.1B | 33.3x | +9.7% | 7.8% | Buy | +26.8% |
MRC MRCY Mercury Systems, Inc. | $5.5B | 95.6x | +3.3% | -1.5% | Buy | +1.1% |
KTO KTOS Kratos Defense & Security Solutions, Inc. | $11.5B | 79.3x | +19.2% | 2.1% | Buy | +79.7% |
HEI HEI HEICO Corporation | $25.0B | 52.8x | +14.4% | 15.4% | Buy | +25.2% |
CW CW Curtiss-Wright Corporation | $27.4B | 49.3x | +11.0% | 13.8% | Buy | -4.6% |
ASG ASGN ASGN Incorporated | $895M | 5.8x | -2.1% | 2.9% | Hold | +79.4% |
This peer comparison reflects companies with similar business models, product lines, or market positioning, supplemented by industry grouping when direct matches are limited.
DRS Dividend and Capital Return
DRS returns 1.2% total yield, led by a 0.85% dividend.
Dividend SustainableFCF Well Covered
Total Shareholder Yield
1.2%
Dividend + buyback return per year
Buyback Yield
0.3%
Dividend Yield
0.85%
Payout Ratio
34.5%
How DRS Splits Its Return
Div 0.85%
Buyback 0.3%
Dividend 0.85%Buybacks 0.3%
Dividend Profile
Yield, cadence, and growth quality
Dividend / Share
Trailing annualized cash dividend
$0.36
Growth Streak
Consecutive years of dividend increases
0Y
3Y Div CAGR
-42.1%
5Y Div CAGR
—
Ex-Dividend Date
—
Payment Cadence
Quarterly
4 payments over the last 12 months
Buyback Engine
How much per-share support comes from repurchases
Repurchases (TTM)
Cash used for buybacks in the latest trailing period
$35M
Estimated Shares Retired
837.5K
Approx. Share Reduction
0.3%
Shares Outstanding
Current diluted share count from the screening snapshot
266M
| Year | Div / Share | YoY Grw | BB Yield | Total Yield |
|---|---|---|---|---|
| 2026 | $0.09 | — | — | — |
| 2025 | $0.36 | — | 0.4% | 1.4% |
FAQ
7 questionsDRS Investor Questions
Common questions answered from live analyst data and company financials.
01Is Leonardo DRS, Inc. (DRS) stock a buy or sell in 2026?
Leonardo DRS, Inc. (DRS) is rated Buy by Wall Street analysts as of 2026. Of 9 analysts covering the stock, 7 rate it Buy or Strong Buy, 2 rate it Hold, and 0 rate it Sell or Strong Sell. The consensus 12-month price target is $53, implying +26.8% from the current price of $42. The bear case scenario is $23 and the bull case is $112.
02What is the DRS stock price target for 2026?
The Wall Street consensus price target for DRS is $53 based on 9 analyst estimates. The high-end target is $59 (+41.2% from today), and the low-end target is $47 (+12.5%). The base case model target is $54.
03Is Leonardo DRS, Inc. (DRS) stock overvalued in 2026?
DRS trades at 33.3x times forward earnings. The stock trades at a notable premium to the broad market, which is typical for businesses with strong free cash flow and above-average growth expectations. Based on current multiples versus the peer group, the relative model signals significantly overvalued. Whether the stock is over or undervalued ultimately depends on whether consensus earnings estimates are achievable.
04What are the main risks for Leonardo DRS, Inc. (DRS) stock in 2026?
The primary risks for DRS in 2026 are: (1) History of Losses — DRS has recently achieved profitability, but there is a significant risk that it may not sustain this profitability due to its limited history of operating at its current scale and complexity. (2) Dependence on Third-Party Providers — The company's reliance on third-party data, technology, and infrastructure poses a high risk. (3) Cybersecurity Threats — DRS is vulnerable to cyberattacks and data breaches, which could disrupt services and significantly harm its financial condition and operational results. Each factor has the potential to pressure earnings or compress the stock's valuation multiple.
05What is Leonardo DRS, Inc.'s revenue and earnings forecast?
Analyst consensus estimates DRS will report consensus revenue of $4.1B (+9.7% year-over-year) and EPS of $1.20 for the upcoming fiscal year. The following year, analysts project $4.5B in revenue.
06When does Leonardo DRS, Inc. (DRS) report its next earnings?
A confirmed upcoming earnings date for DRS is not yet available. Check the Earnings section above for the most recent quarterly report dates and forward estimates.
07How much free cash flow does Leonardo DRS, Inc. generate?
Leonardo DRS, Inc. (DRS) generated $397M in free cash flow over the trailing twelve months — a free cash flow margin of 10.7%. DRS returns capital to shareholders through dividends (0.9% yield) and share repurchases ($35M TTM).