Leonardo DRS, Inc. (DRS)
Valuation Overview•Is Leonardo DRS, Inc. Overvalued or Undervalued?
Trading at a discount compared to peers, but the underlying intrinsic cash flows struggle to support the current price.
Moderate quality score of 66/100, reflecting stable operating margins and manageable leverage.
Analysts remain bullish, forecasting further upside expansion with consensus targets suggesting solid gains.
Verdict: Solid fundamental quality, though profitability presents a headwind.
Wall Street is highly bullish, projecting significant upside alongside robust expected earnings growth. However, capital return yields remain modest, anchored by a strong, well-covered dividend yield.
DRS struggles with subpar profitability and pressured margins. This is backed by a fortress balance sheet, holding significant net cash ($177M) and minimal debt risk.
The company demonstrates solid revenue growth (10.6% 3Y CAGR) however, earnings have severely contracted over the same period. Operating efficiency remains adequate with margins around 9.9%.
| Financial Metric | Trend (12Q) | Latest Qtr | 1Y Growth | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| Revenue | $846.0M | +12.8% | +10.6% | +5.6% | — | |
| EBITDA | $77.0M | — | -11.0% | — | — | |
| Net Income | $62.0M | +30.5% | -11.8% | — | — | |
| EPS (Diluted) | $0.23 | +28.7% | -18.2% | +12.6% | — | |
| Free Cash Flow | $0.00 | +22.0% | — | +26.9% | — |
| Metric | TTM | 3Y Avg | 5Y Avg | 10Y Avg |
|---|---|---|---|---|
| Gross Margin | 24.2% | 23.0% | 21.9% | 18.4% |
| Operating Margin | 9.9% | 8.9% | 11.2% | 10.1% |
| Net Margin | 7.8% | 6.7% | 8.1% | 6.1% |
| FCF Margin | 10.7% | 5.7% | 4.0% | 4.2% |
| Quarter | EPS Est. | EPS Act. | Surprise | EPS | Rev |
|---|---|---|---|---|---|
| Q2'26Latest | $0.21 | $0.26 | +23.8% | ||
| Q1'26 | $0.37 | $0.42 | +13.5% | ||
| Q4'25 | $0.28 | $0.29 | +3.6% | ||
| Q3'25 | $0.22 | $0.23 | +4.5% | ||
| Q2'25 | $0.17 | $0.20 | +21.1% | ||
| Q1'25 | $0.36 | $0.38 | +5.6% | ||
| Q4'24 | $0.20 | $0.24 | +20.0% | ||
| Q3'24 | $0.14 | $0.18 | +28.6% |
Total return is +5.0% (1Y), lagging the benchmark by -20.0%
| Period | Total Return | vs S&P 500 (Alpha) | Dividend Contribution |
|---|---|---|---|
| YTD | +33.0% | +23.7% | — |
| 1Y | +5.0% | -20.0% | +0.8% |
| 3YCAGR | +40.1% | +21.1% | +3.2% |
| 5YCAGR | +29.5% | +17.0% | +4.2% |
| 10YCAGR | +43.7% | +30.0% | — |
The S&P 500 is at 31.3x trailing P/E — Expensive relative to historical averages.
Quick answers to common questions about Leonardo DRS, Inc. (DRS) valuation, health, and returns.
Leonardo DRS, Inc. is estimated to be overvalued under our discounted cash flow framework. relative multiples indicate the stock is Cheap versus peers compared to industry peers. overvalued (implying -44.1% downside from DCF intrinsic value of $25.77)
Leonardo DRS, Inc. has multiple valuation anchors: DCF Intrinsic Value: $25.77 | Peer Relative Fair Value: $70.06 | Wall Street Analyst Target: $53.33 (implying +15.7% upside). A convergence of these signals offers higher conviction.
Leonardo DRS, Inc. displays good financial health with a composite quality score of 66/100, supported by a Altman Z-Score of 4.4 (safe zone), Piotroski F-Score of 7/9, Return on Invested Capital (ROIC) of 10.5%.
Leonardo DRS, Inc. pays a 0.8% dividend yield, covered by a 35% payout ratio with 1 years of growth, supplemented by a 0.3% buyback yield.
Leonardo DRS, Inc.'s current growth trajectory is Accelerating. The company achieved +12.8% 1Y revenue growth and +28.7% 1Y EPS growth, compared to its 3Y revenue CAGR of +10.6%.
Wall Street consensus is Buy based on 9 analysts, beating EPS expectations in 100% of recent quarters with a 15-quarter streak. The consensus price target represents a +15.7% change from current levels.
Investment risks for Leonardo DRS, Inc. include: -32.8% 1-year max drawdown. Volatility risk is characterized by a beta of 1.15x.
No. These computations are purely quantitative model outputs for informational purposes. They do not account for qualitative management shifts or macro events. Always consult a licensed RIA before buying or selling shares.
Disclaimer: This page is for informational purposes only and does not constitute financial advice. All valuation models, scores, and target estimates are automated computations under stated assumptions and should not be relied upon as the sole basis for any investment decision.