CluenexLeonardo DRS DRS
Leonardo DRS scores good on business quality (6.2 of 10). Here is why, in plain words, and what our sealed record shows.
Why it matters
- What Leonardo DRS does
Leonardo DRS designs and manufactures advanced defense technology for the U.S. military, specializing in naval propulsion, sensing, and computing systems. Government programs pay for these mission-critical components to modernize armed forces capabilities.
- What it does best
Leonardo DRS excels in turning defense electronics demand into strong free cash flow, posting a 43% sector percentile in FCF margin. This performance outpaces peer Textron's 5.0% FCF margin, driven by sticky multi-year military contracts that ensure recurring project funding.
- The main risk
Geopolitical budget shifts and defense spending delays pose the primary threat. Because the entire revenue base relies on U.S. and allied defense contracts, any legislative funding gridlock directly freezes program rollouts and suppresses top-line expansion.
Quality, check by check
Scored against its own industry, from company filings.
Operating margin stands at 10.5% with a net margin of 8.5%, supported by a gross margin of 24.9%. Profitability is steadily expanding as revenue scales, though low baseline gross margins limit overall earnings power compared to software peers.
The moat rests on deep customer switching costs within defense agencies, locking in military buyers through specialized technical integration. Its operating margin sits in the 34th sector percentile, reflecting a modest competitive barrier that prevents rapid replication.
Revenue reached $3.8 billion, fueled by a 12.8% growth rate that sits in the top quartile of its sector at the 82nd percentile. This momentum accelerates past historical figures, driven by sustained demand for advanced defense systems.
With a net debt position of negative $300 million and $647 million in cash, the balance sheet is exceptionally secure. Free cash flow surged to $363 million, marking a continuous multi-year improvement that leaves the company financially robust.
Insiders
Executives and directors, from SEC Form 4 filings we read ourselves. Open market trades only; grants, option exercises and pre-planned sales left out.
No open market buys or unplanned sales by executives or directors.
Our sealed record on DRS
Verdicts appear here 30 days after we publish them; members see today's. Each one is in the nightly ledger, fingerprinted the night it was made.
The first sealed verdicts appear here on Oct 11, 2026.
Questions
Leonardo DRS scores good on the Cluenex quality check (6.2 of 10), measured against its own industry. Profitability is weak, moat fair, growth steady and financial health strong.
In the last 90 days of SEC Form 4 filings: No open market buys or unplanned sales by executives or directors.
Oct 29, 2026.
See DRS today
- Today's verdict on DRS, and why
- Fair value with cautious, base and optimistic cases
- The exact price that would change the verdict
- Which stocks each signal names, the night it fires
Cite this page: Cluenex, “Leonardo DRS (DRS)”, https://cluenex.com/stocks/drs/, data as of Oct 10, 2026.