Assessing Leonardo DRS (DRS) Valuation After New Missile Defense Subcontract And Naval Facility Expansion

Simply Wall St.02-01

Leonardo DRS (DRS) has put fresh attention on its stock after winning a major subcontract for advanced infrared mission payloads under the Space Development Agency’s Tracking Layer Tranche 3 missile ...

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The stock has responded with a 20.45% 1 month...","collect":0,"end_time":0,"defaultTopTitle":"simplywall.st","property":[],"viewcount":null,"language":"en","relate_stocks":{"IE00B19Z4B17.USD":"LEGG MASON ROYCE US SMALL CAP OPPORTUNITY \"A\" (USD) ACC","DRS":"Leonardo DRS, Inc.","IE0031619046.USD":"LEGG MASON ROYCE US SMALL CAP OPPORTUNITY \"A\" (USD) INC","DCF":"Dreyfus Alcentra Global Credit Income 2024 Target Term Fund, Inc","BK4187":"航天航空与国防","IE00B7SZL793.SGD":"Legg Mason Royce - US Small Cap Opportunity A Acc SGD-H","IE00B66KJ199.SGD":"LEGG MASON ROYCE US SMALL CAP OPPORTUNITY  \" A\" (SGD) ACC"},"translate_title":"评估新导弹防御分包合同和海军设施扩建后莱昂纳多DRS(DRS)的估值","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"DCF":1,"DRS":1.5},"content_text":"Leonardo DRS (DRS) has put fresh attention on its stock after winning a major subcontract for advanced infrared mission payloads under the Space Development Agency’s Tracking Layer Tranche 3 missile defense program. See our latest analysis for Leonardo DRS. That missile defense subcontract lands on top of a busy month for Leonardo DRS, including the opening of a new naval power and propulsion facility and a fresh US$500m revolving credit line. The stock has responded with a 20.45% 1 month share price return and a 211.57% 3 year total shareholder return, suggesting momentum has been building over time. If this kind of defense demand has your attention, it could be a good moment to see what else is moving among aerospace and defense stocks beyond Leonardo DRS. With shares up 20.45% in the past month and a three-year total return above 200%, plus a price target of US$48.10 versus a US$41.06 close, you have to ask: is there still a buying opportunity here, or is the market already pricing in future growth? AdvertisementMost Popular Narrative: 13.2% Undervalued Against the last close of $41.06, the most followed narrative pegs Leonardo DRS at a fair value of $47.30, using a 7.6% discount rate and detailed earnings assumptions.  The company's strategic alignment with national priorities, including investments in naval modernization, next-generation air and missile defense (such as the Golden Dome initiative), and counter-UAS capabilities, is presented as a foundation for premium contract awards and program expansions, with potential benefits for both revenue and net margins over the next several years.   Global increases in digitization and modernization of military forces are cited as benefiting DRS's proprietary solutions in network computing, electronic warfare, and electric propulsion. These factors are described as supporting higher average selling prices and expanded platform content, with expectations that this could enhance net margins and contribute to operational leverage.  Read the complete narrative. Want to see how this is linked to a $47.30 fair value tag? The narrative relies on steady top line growth, improving margins, and a richer earnings multiple. Curious which assumptions have the most impact and how sensitive that value is to small changes in those inputs? The full story connects those pieces. Result: Fair Value of $47.30 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, you still need to weigh risks, such as raw material constraints that could pressure margins and heavy reliance on large U.S. government contracts that may shift. Find out about the key risks to this Leonardo DRS narrative. Another Angle On Value That $47.30 fair value hinges on earnings forecasts and a premium P/E, but our DCF model tells a different story, with an estimate of $31.79 per share. This implies DRS is trading above its future cash flow value. So which signal do you trust more, the story or the cash flows? Look into how the SWS DCF model arrives at its fair value. DRS Discounted Cash Flow as at Jan 2026Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Leonardo DRS for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 868 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.  Build Your Own Leonardo DRS Narrative If you see the numbers differently or prefer to test your own assumptions, you can build a custom view in just a few minutes, starting with Do it your way. A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Leonardo DRS. Looking for more investment ideas? If you are serious about broadening your watchlist, this is the moment to scan other opportunities before they move out of reach.  Spot early movers by checking out these 3531 penny stocks with strong financials that already pair small size with solid financial footing. Tap into future tech themes by reviewing these 25 AI penny stocks that link artificial intelligence with real business traction. Hunt for potential value by scanning these 868 undervalued stocks based on cash flows where prices and cash flows currently tell different stories.   This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    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\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.New: AI Stock Screener & AlertsOur new AI Stock Screener scans the market every day to uncover opportunities.• Dividend Powerhouses (3%+ Yield)• Undervalued Small Caps with Insider Buying• High growth Tech and AI CompaniesOr build your own from over 50 metrics.Explore Now for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. 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