What Happened?
Shares of aerospace and defense company Leonardo DRS (NASDAQ: DRS) fell 5% in the afternoon session after the company reported strong third-quarter results that beat expectations but provided a mixed outlook for the full year.
The aerospace and defense firm's sales grew 18.2% year on year to $960 million, and its adjusted earnings per share of $0.29 also topped analyst estimates. Despite these strong figures and a slightly increased full-year revenue forecast, the company's guidance for full-year EBITDA (a measure of profit) came in at a midpoint of $445 million, which was just below what analysts had projected. This slight miss on the profit outlook appeared to be the key point of concern for investors, overshadowing the otherwise positive headline numbers.
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What Is The Market Telling Us
Leonardo DRS’s shares are quite volatile and have had 16 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 12 months ago when the stock gained 14.4% on the news that the company reported a "beat and raise" quarter. Third quarter results blew past analysts' revenue, EBITDA, and EPS expectations. The top line benefited from demand for programs related to advanced infrared sensing, force protection and tactical radars, while the bottom line was supported by improved volumes. Looking ahead, the company lifted its full-year revenue and EBITDA/EPS guidance. Zooming out, we think this was a solid "beat and raise" quarter.
Leonardo DRS is up 18.6% since the beginning of the year, but at $38.40 per share, it is still trading 20.7% below its 52-week high of $48.44 from July 2025.
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