Abstract

Leonardo DRS, Inc. will report quarterly results on February 24, 2026 Pre-Market, with consensus pointing to higher revenue and earnings, against a backdrop of steady program execution and recent operational updates.

Market Forecast

Consensus projects Leonardo DRS, Inc. to deliver revenue of 1.00 billion in the current quarter, up 6.51% year over year, with adjusted EPS estimated at $0.37, up 4.88% year over year, and EBIT of 126.46 million, up 0.60% year over year; margin guidance has not been provided in forecasts. The main business appears positioned to convert funded backlog into shipments across core programs, with continued demand for power and propulsion, sensor, and computing solutions sustaining quarterly visibility. The most promising segment by scale is Advanced Sensing and Computing, which generated 580.00 million last quarter; at the company level, total revenue increased 18.23% year over year in the previous quarter, indicating healthy demand across programs.

Last Quarter Review

Leonardo DRS, Inc. reported revenue of 960.00 million, gross profit margin of 23.12%, GAAP net profit attributable to the parent company of 72.00 million, net profit margin of 7.50%, and adjusted EPS of $0.29, up 20.83% year over year. A notable financial highlight was quarter-on-quarter net profit growth of 33.33%, supported by stronger throughput and a favorable mix of completed milestones. Main business performance was led by Advanced Sensing and Computing at 580.00 million and Integrated Mission Systems at 383.00 million, with total company revenue up 18.23% year over year.

Current Quarter Outlook (with major analytical insights)

Advanced Sensing and Computing

Advanced Sensing and Computing is the largest revenue contributor at 580.00 million last quarter, and the company’s forecast suggests overall revenue growth of 6.51% year over year this quarter, which typically supports stable volume in this segment. The mix within sensing and computing tends to be influenced by program milestones and deliveries across radar, electro-optical, and computing architectures; as deliveries concentrate, margin capture often hinges on engineering progress and production yields. With adjusted EPS expected to be $0.37, up 4.88% year over year, incremental profitability from this segment will likely be shaped by cost absorption and the cadence of integration activities. The previous quarter’s gross margin of 23.12% and net margin of 7.50% underscores that margin leverage was present but not pronounced, consistent with system-integration businesses that carry a blend of hardware and services. Execution risk this quarter is linked to production throughput and integration schedules on key programs; any slippage can defer recognition, but strengthened operational coordination since late last year has tended to reduce variability in quarterly outcomes.

Integrated Mission Systems

Integrated Mission Systems posted 383.00 million last quarter and benefits from the company’s expanding naval power and propulsion footprint. On January 23, 2026, Leonardo DRS, Inc. opened a naval power and propulsion manufacturing and testing facility in the Charleston, South Carolina region, aimed at expanding domestic capacity for U.S. Navy submarine and shipbuilding programs, including systems supporting the Columbia-class ballistic missile submarine program. This facility expansion should improve throughput, test capacity, and quality processes, potentially enabling smoother delivery schedules and better overhead absorption in 2026. With EBIT expected at 126.46 million this quarter (up 0.60% year over year) against revenue growth of 6.51%, the implication is modest operating leverage at best, making segment-level margin performance sensitive to mix and milestone timing. The previous quarter’s net profit grew 33.33% quarter-on-quarter, reflecting that the company captured more earnings as programs advanced; if the new facility accelerates key component testing and ramp, that improvement could continue to underpin EBIT despite only slight year-over-year growth in EBIT estimates. The most relevant near-term drivers are the pace of Columbia-class program contributions and the execution of energy conversion and power distribution system deliveries, which together have meaningful influence on Integrated Mission Systems revenue recognition and profitability each quarter.

Key Stock Price Drivers This Quarter

The ratio of revenue growth (6.51% year over year) to EBIT growth (0.60% year over year) suggests the market expects limited operating leverage for the current quarter, which places greater attention on gross margin stability relative to last quarter’s 23.12%. If the revenue mix shifts toward higher hardware content without corresponding pricing or productivity gains, gross margin could be pressured, which would dampen EPS beyond the $0.37 forecast. Conversely, stronger throughput in power and propulsion and higher-margin sensor deliveries could offset that risk, supporting margins closer to the previous quarter’s profile. The quarter-on-quarter net profit acceleration of 33.33% last quarter indicates that operational momentum has been building; investors will watch whether this converts into sustained EPS support in the current quarter despite cautious EBIT growth. Bookings and backlog conversion rates also matter for sentiment: smooth conversion from funded contracts to shipments typically underpins confidence in near-term revenue and earnings continuity. Lastly, management execution initiatives—strengthened by leadership updates announced in early January—could reinforce cross-business coordination and delivery discipline, which contributes to predictable quarterly outcomes that the market tends to reward.

Analyst Opinions

The prevailing view among covering institutions is bullish. On January 9, 2026, Truist increased its price target to $54 while maintaining a Buy rating, and external surveys indicated an average Buy rating with a mean price target of $48.10, reflecting constructive expectations into February 2026. These views emphasize the company’s execution on core programs and the potential incremental benefit from expanded naval power and propulsion capacity following the January facility opening. The Buy-side case highlights the durability of program funding and revenue visibility implied by the current quarter’s 1.00 billion consensus estimate and the previous quarter’s 18.23% year-over-year revenue growth, suggesting supportive demand conditions for near-term results. Analysts also point to the $0.37 adjusted EPS forecast, up 4.88% year over year, as reinforcing the narrative of modest earnings progression, even as EBIT growth is expected to be only 0.60% year over year; in this context, ongoing throughput improvements and mix optimization are seen as primary levers for EPS delivery. The bullish camp’s focus this quarter is whether the company can maintain or slightly expand margins from last quarter’s 23.12% gross margin and 7.50% net margin, powered by consistent execution across Advanced Sensing and Computing and improved productivity in Integrated Mission Systems. If the ramp at the Charleston-area facility enhances testing throughput and delivery cadence for naval systems, several analysts believe Leonardo DRS, Inc. can sustain the revenue and EPS trajectory implied by current estimates and maintain earnings quality through 2026.