Core Viewpoint - The comparison between Leonardo DRS, Inc. and Heico Corporation indicates that DRS presents a better value opportunity for investors based on various valuation metrics [1][6]. Valuation Metrics - Both Leonardo DRS, Inc. and Heico Corporation currently hold a Zacks Rank of 2 (Buy), indicating positive earnings estimate revisions [3]. - DRS has a forward P/E ratio of 33.85, while HEI has a higher forward P/E of 57.12, suggesting DRS is more attractively priced [5]. - The PEG ratio for DRS is 2.32, compared to HEI's PEG ratio of 3.35, indicating DRS may offer better value relative to its expected earnings growth [5]. - DRS has a P/B ratio of 3.75, significantly lower than HEI's P/B ratio of 9.15, further supporting DRS's position as the superior value option [6]. - DRS's Value grade is B, while HEI's Value grade is D, highlighting the relative undervaluation of DRS [6].

Core Viewpoint - Leonardo DRS, Inc. has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in a company's earnings picture, which is crucial for predicting near-term stock price movements [2][4]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in stock price movements [4]. Company Performance Indicators - The upgrade for Leonardo DRS, Inc. suggests an improvement in the company's underlying business, which should encourage investors to drive the stock price higher [5]. - The Zacks Consensus Estimate indicates that Leonardo DRS, Inc. is expected to earn $1.07 per share for the fiscal year ending December 2025, reflecting a year-over-year increase of 15.1% [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks which have averaged a +25% annual return since 1988 [7]. - The upgrade to Zacks Rank 2 places Leonardo DRS, Inc. in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10].

Company Overview - Leonardo DRS, Inc. (DRS) shares increased by 9% to close at $34.26, with trading volume significantly higher than usual, contrasting with a 0.5% loss over the past four weeks [1][2] - The recent rise in DRS' share price is linked to the U.S. President's announcement of a substantial increase in defense spending, with approximately $1 trillion allocated to defense in the upcoming fiscal 2026 budget [2] Earnings Expectations - DRS is projected to report quarterly earnings of $0.17 per share, reflecting a year-over-year increase of 21.4%, with revenues expected to reach $744.53 million, an 8.2% increase from the previous year [3] - The consensus EPS estimate for DRS has remained stable over the last 30 days, indicating that stock price movements may not sustain without changes in earnings estimate revisions [4] Industry Context - DRS operates within the Zacks Aerospace - Defense Equipment industry, where another company, Teledyne Technologies (TDY), saw a 7.6% increase in its stock price, closing at $468.69, despite a -10.8% return over the past month [4] - Teledyne's consensus EPS estimate has decreased by 1.8% over the past month to $4.92, which still represents an 8.1% increase compared to the previous year [5]

Core Viewpoint - Leonardo DRS, Inc. has received a Zacks Rank 2 (Buy) upgrade, indicating a positive outlook on its earnings potential, which is expected to positively influence its stock price [1][3]. Earnings Estimates and Revisions - The Zacks Consensus Estimate for Leonardo DRS, Inc. for the fiscal year ending December 2025 is projected at $1.07 per share, reflecting a 15.1% increase from the previous year's reported figure [8]. - Over the past three months, analysts have raised their earnings estimates for Leonardo DRS, with a 0.2% increase in the Zacks Consensus Estimate [8]. Impact of Institutional Investors - Changes in earnings estimates are strongly correlated with stock price movements, largely due to institutional investors who adjust their valuations based on these estimates [4]. - An increase in earnings estimates typically leads to higher fair value calculations for stocks, prompting institutional buying or selling actions that affect stock prices [4]. Zacks Rating System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 (Strong Buy) stocks historically generating an average annual return of +25% since 1988 [7]. - The upgrade of Leonardo DRS to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating strong potential for market-beating returns in the near term [10].

Revenue Sources - The U.S. government accounted for 79% of total revenues in 2024, with the Department of Defense (DoD) representing 37% of total revenues[33]. - Approximately 63% of revenue in 2024 was derived from subcontractor positions, indicating a reliance on partnerships for contract fulfillment[36]. - The company generated $2.710 billion from firm-fixed price contracts in 2024, an increase from $2.373 billion in 2023[38]. - The company’s total revenues for 2024 were significantly supported by long-term programs and incumbent supplier relationships[37]. Backlog and Contracts - Total backlog increased to $8.509 billion in 2024, up from $7.751 billion in 2023, with funded backlog at $4.177 billion and unfunded backlog at $4.332 billion[42]. - The DoD's fiscal year 2025 budget request includes $850 billion for national defense programs, remaining largely flat compared to prior year levels[32]. - The company has a diverse business mix, with no single contract representing more than 10% of revenues for 2024[37]. Research and Development - Company-funded R&D expenses rose to $92 million in 2024, compared to $82 million in 2023 and $58 million in 2022[46]. - Leonardo S.p.A., the company's indirect majority stockholder, reported preliminary consolidated revenues of €17.8 billion and invested €2.5 billion in R&D in 2024[69]. Workforce and Employee Relations - The workforce included approximately 7,000 employees as of December 31, 2024, with 7% represented by labor unions[49]. - The company maintains a strong commitment to employee development and community support, emphasizing ethical business practices and safety in the workplace[55]. Financial Performance and Risks - The company generated a significant portion of its revenue, profit, and cash flows in the fourth quarter of its fiscal year, influenced by the U.S. federal government's budget cycle[60]. - The company reported an outstanding balance of $203 million under its 2022 Term Loan A, with a potential annual interest expense fluctuation of approximately $1 million for a 0.5% change in interest rates[399]. - The company has limited foreign currency exposure, primarily with receivables of $27 million in Canadian dollars, where a 10% fluctuation in exchange rates would not materially impact financial statements[400]. - The company experienced inflationary pressures affecting supply chain costs, particularly in micro-electronics and commodities, which could negatively impact future financial results[401]. - The company is subject to various procurement regulations and legal requirements, which could increase costs and risks, potentially affecting profitability[62]. Mergers and Acquisitions - The company completed the merger with RADA Electronic Industries Ltd. on November 28, 2022, resulting in RADA becoming a wholly-owned subsidiary and providing a 10% interest in RadSee Technologies Ltd.[57]. - The divestiture of the Global Enterprise Solutions business to SES Government Solutions, Inc. was completed on August 1, 2022, generating net cash proceeds of $427 million after adjustments[58]. - The company divested its equity investment in Advanced Acoustic Concepts LLC to Thales Defense & Security, Inc., resulting in proceeds of $56 million[59].

Group 1 - Aerospace and defense stocks are experiencing a sell-off due to potential reductions in defense budgets, impacting companies like Leonardo DRS, which has seen a 22% decline in stock value since November [1] - The Aerospace Forum aims to identify investment opportunities within the aerospace, defense, and airline sectors, leveraging data analytics for informed analysis [1] - The analyst behind the report has a background in aerospace engineering, providing context to industry developments and their potential effects on investment strategies [1] Group 2 - The article emphasizes that past performance does not guarantee future results, and no specific investment recommendations are provided [2] - It is noted that the analysts contributing to the platform may not be licensed or certified by any regulatory body, indicating a diverse range of perspectives [2]

Financial Data and Key Metrics Changes - In Q4 2024, revenue was $981 million, a 6% year-over-year increase, while full-year revenue reached $3.2 billion, representing a 14% organic growth over 2023 [40][41] - Adjusted EBITDA for Q4 was $148 million, up 13% year-over-year, and for the full year, it was $400 million, reflecting a 23% increase [42][43] - Diluted EPS and adjusted diluted EPS increased by 18% and 23% year-over-year in Q4, respectively, and for the full year, they rose by 25% and 27% [45][46] - Free cash flow for Q4 was robust at $416 million, leading to a total of $190 million for the full year [46][47] Business Line Data and Key Metrics Changes - Advanced Sensing and Computing segment revenue grew by 9% in Q4 and 16% for the full year, while Integrated Mission Systems segment revenue decreased slightly by 1% in Q4 but increased by 11% for the full year [41][44] - Adjusted EBITDA for the Advanced Sensing and Computing segment increased by 9% in Q4 and 22% for the full year, while the Integrated Mission Systems segment saw a 24% increase in Q4 and 27% for the full year [44] Market Data and Key Metrics Changes - International revenue rose to 13% in 2024, marking the fourth consecutive year of increased international business [30] - The company secured over $4 billion in contract awards throughout the year, resulting in a 1.3% book-to-bill ratio for both Q4 and the year [10][11] Company Strategy and Development Direction - The company plans to increase investments in R&D and capital expenditures by approximately 25% year-over-year, focusing on advanced sensing modalities, directed energy capabilities, and AI applications [12][51] - The company maintains a strong focus on execution excellence and aims to drive innovation and capability to meet customer needs while generating value for shareholders [19][38] Management's Comments on Operating Environment and Future Outlook - The management highlighted an elevated global threat environment, which is expected to drive continued defense investment from the US and allied nations [13][14] - The company anticipates 2025 to be another strong year, with revenue guidance set between $3.425 billion and $3.525 billion, implying 6% to 9% organic growth [48][49] Other Important Information - The company announced a cash dividend of $0.09 per share and a share buyback program totaling $75 million over the next two years [35][36] - The new facility in Charleston, South Carolina, is expected to enhance capabilities in steam turbine systems and support the Columbia class program [26][27] Q&A Session Summary Question: Impact of Doge effort on the company - Management indicated that the Doge effort has not yet reached the Department of Defense and remains focused on the new administration's strategic priorities [60] Question: Clarification on one-off items in Q4 - The CFO explained that the adjustments were primarily due to currency shifts affecting balance sheet items [63] Question: Margin targets for 2026 and other contributing areas - Management noted that smaller sensing and force protection programs transitioning from development to production phases would contribute to margin improvements alongside the Columbia program [68][69] Question: Status of KDDX and DDGX programs - Management confirmed ongoing engagement with the Korean customer for KDDX and noted growing interest in electric propulsion for DDGX [79][80] Question: Concerns about raw material supply - The CFO stated that while germanium remains a focus, overall supply chain stability has improved, with no significant concerns outside of germanium [85][86] Question: Implications of potential budget cuts - Management expressed confidence in their balanced exposure across services and highlighted growth areas in counter UAS and AI-supported computing [92][94] Question: Foreign military sales impact due to geopolitical tensions - Management noted a slight increase in revenue from Ukraine but anticipated a tapering off as negotiations progress, while European demand for American systems may rise [111][112]

Quarterly Earnings Presentation Q4 | 2024 February 20, 2025 Disclaimers Forward-Looking Statements In this presentation, when using the terms the "company," "DRS," "we," "us" and "our," unless otherwise indicated or the context otherwise requires, we are referring to Leonardo DRS, Inc. This presentation contains forward-looking statements and cautionary statements within the meaning of the Private Securities Litigation Reform Act of 1995. Some of the forward-looking statements can be identified by the use o ...

Core Insights - Leonardo DRS, Inc. reported revenue of $981 million for the quarter ended December 2024, reflecting a year-over-year increase of 5.9% [1] - The earnings per share (EPS) for the quarter was $0.38, up from $0.31 in the same quarter last year, indicating a positive trend in profitability [1] - The reported revenue exceeded the Zacks Consensus Estimate of $942.62 million by 4.07%, and the EPS also surpassed the consensus estimate of $0.36 by 5.56% [1] Financial Performance Metrics - Revenue from the IMS segment was $326 million, slightly below the average estimate of $329.20 million from three analysts [4] - Revenue from the ASC segment was $660 million, exceeding the average estimate of $619.13 million from three analysts [4] - Adjusted EBITDA for the IMS segment was $46 million, surpassing the estimated $44.69 million, while the ASC segment's adjusted EBITDA was $102 million, above the average estimate of $96.86 million [4] Stock Performance - Over the past month, shares of Leonardo DRS, Inc. have declined by 20.2%, contrasting with a 2.6% increase in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

分组1 - Leonardo DRS, Inc. reported quarterly earnings of $0.38 per share, exceeding the Zacks Consensus Estimate of $0.36 per share, and up from $0.31 per share a year ago, representing an earnings surprise of 5.56% [1] - The company achieved revenues of $981 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 4.07%, compared to $926 million in the same quarter last year [2] - Over the last four quarters, Leonardo DRS has consistently surpassed consensus EPS and revenue estimates [2] 分组2 - The stock has underperformed, losing about 8.6% since the beginning of the year, while the S&P 500 has gained 4.5% [3] - The current consensus EPS estimate for the upcoming quarter is $0.18 on revenues of $756.87 million, and for the current fiscal year, it is $1.07 on revenues of $3.43 billion [7] - The Aerospace - Defense Equipment industry is currently ranked in the bottom 49% of over 250 Zacks industries, which may impact the stock's performance [8]