Leonardo DRS Q1 2026 Earnings Snapshot

Leonardo DRS (DRS) comes into its latest Q1 2026 update following Q4 2025 revenue of US$1.06 billion, Basic EPS of US$0.39 and net income of US$102 million, with trailing twelve month revenue at US$3.6 billion and Basic EPS of about US$1.05. The company reported quarterly revenue increasing from US$799 million in Q1 2025 to US$1.06 billion in Q4 2025, while Basic EPS over the same period moved from US$0.19 to US$0.39. This sets up the new quarter against a backdrop of higher trailing net income of US$278 million compared with US$213 million a year earlier. With revenue, EPS and net profit margin all indicating a tighter earnings profile, the focus now turns to how durable these margin levels look as fresh Q1 numbers are released.

See our full analysis for Leonardo DRS.

With the headline figures in place, the next step is to see how these results compare with the most common narratives around Leonardo DRS, highlighting where the earnings story is reinforced and where it is challenged.

TTM earnings grow faster than revenue

• On a trailing basis, revenue moved from US$3.2b to US$3.6b while net income went from US$213 million to US$278 million and Basic EPS rose from US$0.81 to about US$1.05, which lines up with the 30.5% earnings growth figure over the past year versus a 5 year average of 7.8% per year.
• Supporters of the bullish view point to this faster earnings growth, arguing that improving net margin from 6.6% to 7.6% and higher trailing EPS give the company more room to benefit from defense spending trends. However, the data also shows revenue growth running at 5.4% per year versus 11.2% for the broader US market, so the upbeat case leans heavily on margin and mix rather than top line pace.

Bulls argue that the recent margin uplift and backlog strength could matter more than slower revenue growth, and you can see how they build that case in the 🐂 Leonardo DRS Bull Case.

Valuation sits above DCF fair value

• With the stock at US$39.70, the trailing P/E of about 38x is above both the peer average of roughly 36.4x and the Aerospace & Defense industry at about 34.3x. It also trades higher than the US$37.42 DCF fair value estimate in the dataset.
• Bears highlight this premium, arguing that reliance on U.S. defense contracts and exposure to raw material cost swings could make a 38x P/E and a price above the DCF fair value hard to justify if growth settles closer to the 13.1% earnings forecast and below market revenue growth. In that case, the current multiple would leave less room for disappointment if funding priorities or procurement timing change.

Skeptics often point to rich multiples in defense stocks that already price in strong demand, and this is the angle they focus on in the 🐻 Leonardo DRS Bear Case.

Analyst upside vs current pricing

• Analysts in the dataset have a consensus target of US$52.00, which implies around 31% potential upside from the current US$39.70 share price if their assumptions on revenue growth, margins and earnings to about US$351.1 million hold.
• The consensus narrative leans on earnings forecast growth of 13.1% per year and margin expectations rising from roughly 7.3% to 8.5%. At the same time, the data shows revenue growth assumptions below the broader US market and valuation already above industry P/E averages, so the gap between US$39.70 and the US$52.00 target mostly reflects confidence in those future margins and contract wins rather than what is visible in the trailing 12 months.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Leonardo DRS on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

Seeing both risks and rewards in this story so far is healthy. The fastest way to test that balance is to look at the numbers yourself, then weigh up the 3 key rewards and 1 important warning sign

See What Else Is Out There

Leonardo DRS combines slower revenue growth than the broader US market with a higher P/E and a price above the cited DCF fair value, which tightens its margin for error.

If that combination of slower top line and premium valuation makes you cautious, it is worth checking out 51 high quality undervalued stocks today to compare alternatives priced more modestly.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.