Leonardo DRS, Inc. (DRS) stock analysis

P/E below its 5-year median

Leonardo DRS's P/E of 26.9 is below its own 5-year median of 37.8.

P/E below the industry

Leonardo DRS's P/E of 26.9 is below the Measuring, Analyzing, and Controlling Instruments; Photographic, Medical and Optical Goods; Watches and Clocks median of 30.2.

EV/EBITDA below its 5-year median

Leonardo DRS's EV/EBITDA of 18.5 is below its 5-year median of 18.8.

P/B above the industry

Leonardo DRS's price-to-book of 3.38 is above the Measuring, Analyzing, and Controlling Instruments; Photographic, Medical and Optical Goods; Watches and Clocks median of 3.38.

Trading below fair value

The share price of $36.64 is below our fair value estimate of $40.55.

Margin of safety under 20%

The price is 9.6% below fair value, less than the 20% cushion we look for.

Revenue growing 10%+ a year

Revenue grew 10.6% a year over the last three fiscal years.

EPS growing under 10% a year

Diluted EPS grew -18.2% a year over the last three fiscal years.

Earnings growth accelerating

Net income grew 37.7% over the last twelve months, against a 5-year average of 26.7% a year.

Growing faster than the industry

Revenue grew 8.9% over the last twelve months; the Measuring, Analyzing, and Controlling Instruments; Photographic, Medical and Optical Goods; Watches and Clocks median is 8.6%.

Guidance issued

The latest outlook (2026 Revenue, Oct 29, 2026) was issued for the first time, so it neither adds nor takes away points.

Gross margin improving

Gross margin was 25.3% over the last twelve months, against 23.4% a year earlier.

Return on equity under 15%

Return on equity was 13.2% over the last twelve months and averaged 11.8% over five years; we look for 15% on both.

Return on capital over 10%

Return on invested capital was 13.5%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

Leonardo DRS's return on equity of 13.2% is above the Measuring, Analyzing, and Controlling Instruments; Photographic, Medical and Optical Goods; Watches and Clocks median of 9.5%.

Earnings grew over 5 years

Net income grew 26.7% a year on average over the last five fiscal years.

Net margin above its 5-year average

Net margin was 9.4% over the last twelve months, against a 5-year average of 8.1%.

Net margin below the industry

Leonardo DRS's net margin of 9.4% is below the Measuring, Analyzing, and Controlling Instruments; Photographic, Medical and Optical Goods; Watches and Clocks median of 9.4%.

Low debt

Debt is 6.1% of shareholders' equity, under the 40% we consider low.

Debt falling against equity

Debt to equity fell from 29.9% five years ago to 6.1%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 280% of total debt.

Interest coverage

Interest expense is not reported separately.

Short-term assets cover short-term debts

Current assets are 1.88 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 4.78; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Leonardo DRS paid dividends worth 1.2% of the share price over the last twelve months.

Yield below Treasuries

The 1.2% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Leonardo DRS yields 1.2%.

Dividend stability

Fewer than five years of dividend history.

Earnings cover

Needs dividends paid and net income.

Cash-flow cover

Needs dividends paid and free cash flow.