Key Points
It handily beat the average analyst projections for revenue and profitability in its fourth quarter of 2025.
It's riding a wave of increased defense spending.
- 10 stocks we like better than Leonardo DRS ›
Leonardo DRS (NASDAQ: DRS) was a defense sector stock of choice for many market participants on the second trading day of the week. The company's shares zoomed almost 15% higher on the back of a quarterly and annual earnings report that featured robust growth numbers.
A solid fourth quarter
Leonardo DRS's fourth quarter saw the company earn $1.06 billion in revenue, up 8% year over year. Net income not in accordance with generally accepted accounting principles (GAAP) rose at a higher pitch, increasing by 13% to $114 million, or $0.42 per share.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now, when you join Stock Advisor. See the stocks »
Image source: Getty Images.
On average, according to Zack's, analysts tracking the stock were expecting only $993 million on the top line for Leonardo DRS, and $0.37 in non-GAAP (adjusted) net profit.
In its earnings release, the company attributed the notable improvements in fundamentals to strong demand for products like tactical radars and advanced infrared sensing.
Full steam ahead
The trailing results for Leonardo DRS were impressive, while its guidance for the entirety of 2026 was also encouraging. The company estimates its revenue will be $3.85 billion to $3.95 billion, which would be notably above the under $3.65 billion of 2025. Similarly, adjusted net income is expected to be $1.20 to $1.26 per share, against the actual result of $1.15 last year. The consensus analyst top-line forecast is $3.82 billion, and the profitability forecast is 1.26 per share.
These are prosperous times for the defense industry, particularly given the U.S. military's buildup in the Middle East lately. I feel this country will remain on a fairly aggressive footing for some time, so I think Leonardo DRS and its veteran sector peers will continue to do well.
Should you buy stock in Leonardo DRS right now?
Before you buy stock in Leonardo DRS, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Leonardo DRS wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $409,970!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,174,241!*
Now, it’s worth noting Stock Advisor’s total average return is 889% — a market-crushing outperformance compared to 192% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of February 24, 2026.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
