Industry: Defense Electronics & Systems Technology
— Specializes in advanced sensing, electric power & propulsion, mounted computing, and force protection systems for military applications.
About Company:
Leonardo DRS, a subsidiary of Leonardo S.p.A. (Italian defense giant), is a leading U.S.-based contractor providing high-performance defense systems to the U.S. Department of Defense and allied customers. Its offerings span advanced sensors (EO/IR), electric power & propulsion, network computing, force protection, and sustainment services.
Company History:
Founded in 1968 as DRS Technologies by Leonard Newman and David Gross, the company went public in 1981 and scaled through the 1980s and 1990s. In 2008, it was acquired by Finmeccanica (now Leonardo S.p.A.). In mid-2022, it merged with RADA Electronic Industries and re-listed as Leonardo DRS on Nasdaq, with Leonardo retaining 80.5% ownership.
Company Advantage Over Competitors:
- Platform-agnostic and vertically versatile — acts as prime contractor or subsystem provider, tailored to client needs across many defense domains.
- Technology leadership in EO/IR sensing, electric propulsion, and rugged computing with products deployed on thousands of military platforms.
- Strong backlog and organic growth engine — robust financial performance and expanding capabilities solidify its positioning.
Risk Factors to Consider:
- Exposure to U.S. defense budget cycles and geopolitical shifts could influence order flow.
- Competitive landscape includes major defense contractors and electronics systems providers.
- Parent ownership dynamics — strategic decisions may be influenced by its majority parent, Leonardo S.p.A., though U.S. operations remain independently managed (“screened company”).
What Makes This Company Special or a Good Investment?
- Strong Q2 2025 performance:
- Revenue: $829 million (+10% YoY)
- Net earnings: $54 million (+42% YoY)
- Adjusted EBITDA: $96 million, up 17% with margin expansion
- Backlog: $8.6 billion, growing 9% YoY, demonstrating demand durability
- Dividend declared at $0.09 per share
- Year-over-year strength: In 2024, full-year revenue was $3.23 billion, up 14%, with earnings increasing nearly 27%, reflecting accelerating growth.
- Analyst sentiment: Consensus “Strong Buy” with an average 12-month target of $44, suggesting meaningful upside from current levels.