Leonardo DRS, Inc. DRS, with a robust backlog, rising earnings estimates, efficient debt management and strong liquidity, offers a great investment opportunity in the Zacks Aerospace Defense Equipment industry.

Let’s focus on the factors that make this Zacks Rank #2 (Buy) company a strong investment pick at the moment.

DRS’ Growth Projections & Surprise History

The Zacks Consensus Estimate for DRS’ 2025 earnings per share (EPS) stands at $1.07, which indicates year-over-year growth of 15.1%. The Zacks Consensus Estimate for 2026 EPS is pegged at $1.24, which implies year-over-year growth of 15.9%.

The Zacks Consensus Estimate for Leonardo DRS’ total revenues for 2025 stands at $3.5 billion, which indicates year-over-year growth of 8.4%. The Zacks Consensus Estimate for its 2026 revenues is pegged at $3.73 billion, which suggests a year-over-year increase of 6.4%.

The company’s long-term (three to five years) earnings growth is 14.6%. DRS surpassed expectations in the last four reported quarters and delivered an average earnings surprise of 22.82% in the last four quarters.

Debt Position of DRS

Currently, Leonardo DRS’ total debt to capital is 12.49%, much better than the industry’s average of 52.09%. It indicates that the company can run its business efficiently with much lower debt levels than its industry peers.

DRS’ Liquidity

The company’s current ratio at the end of the fourth quarter of 2024 was 1.94, higher than the industry’s average of 1.68. The ratio, being greater than one, indicates Leonardo DRS’ ability to meet its future short-term liabilities without difficulties.

DRS’ Rising Backlog

DRS’ total backlog as of Dec. 31, 2024 increased 9.8% to $8.51 billion from the year-ago reported figure. Higher demand in airborne, naval and dismounted soldier sensing programs, as well as naval and land-based computing efforts within its Advanced Sensing and Computing segment, was the primary driver of the rise in the backlog.

DRS Stock Price Performance

In the past six months, DRS shares have rallied 25.9% against the industry’s decline of 1.7%.

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Other Stocks to Consider

A few other top-ranked stocks from the same industry are TransDigm Group Inc. TDG, HEICO Corporation HEI and FTAI Aviation Ltd. FTAI, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

TransDigm Group’s earnings growth rate is 13.5%. The Zacks Consensus Estimate for the company’s total revenues for fiscal 2025 stands at $8.87 billion, which indicates year-over-year growth of 11.7%.

HEICO’s long-term earnings growth rate is 17%. The Zacks Consensus Estimate for HEI’s fiscal 2025 sales is pegged at $4.29 billion, which implies an improvement of 11.3% from the fiscal 2024 reported figure.

The Zacks Consensus Estimate for FTAI’s 2025 EPS stands at $6.23 per share, which calls for massive growth of 2,218.8% from the previous year’s figure. The Zacks Consensus Estimate for FTAI’s total revenues for fiscal 2025 is pegged at $2.33 billion, which implies growth of 34.2% from the 2024 reported figure.

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Transdigm Group Incorporated (TDG) : Free Stock Analysis Report

Heico Corporation (HEI) : Free Stock Analysis Report

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This article originally published on Zacks Investment Research (zacks.com).

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