Leonardo DRS (DRS) Lifted Earnings Outlook, Is It Still 28% Below Fair Value?

Leonardo DRS (DRS) drew investor attention after a packed 29 October update that combined a higher 2026 earnings outlook, third quarter results with stronger sales and net income year over year, and a new cash dividend declaration.

The share price reaction has been choppy, with a 1-day share price return that declined 4.94% after the update, even though the 7-day share price return is up 5.13%. Meanwhile, the 3-year total shareholder return of 93.85% points to strong longer term momentum for Leonardo DRS.

Scan beyond Leonardo DRS and compare this move with 54 AI infrastructure stocks that are also tied to defense, sensing, and compute-heavy projects powering the next wave of mission-critical systems.

So is Leonardo DRS trading on the strength of those higher earnings, dividend signals, and long run returns? Or has short term sentiment pulled the price away from the underlying business value?

Most Popular Narrative: 28% Undervalued

On the most widely followed view, Leonardo DRS is worth $52.50 a share, which sits well above the last close of $37.68 and frames the recent selloff as a pricing mismatch rather than a change in the long term story.

Leonardo DRS is materially increasing organic investment, with internal R&D and capital expenditures focused on tactical radars, infrared foundry, naval propulsion and capacity expansion, which can position the company to participate in higher value programs over time and support future earnings and margin profiles.

See why 20 investors see Leonardo DRS as 28% undervalued.

The fair value in that narrative uses a discount rate of 7.94% and pulls together those higher spend levels, earnings forecasts, and contract visibility into a single $52.50 figure. At the same time, the analysts behind it acknowledge the need for newer areas like counter UAS, space sensing, and software to mature into durable, scaled franchises if that valuation is to hold up over time.

Result: Fair Value of $52.50 (UNDERVALUED)

Still, the Leonardo DRS story can break if heavier R&D and capex fail to translate into durable contracts, or if backlog and returns weaken again.

Find out about the key risks to this Leonardo DRS narrative.

Next Steps

Curious whether this upbeat tone around Leonardo DRS really fits your own risk and reward comfort zone? Move fast, review the underlying drivers, and pressure test them against the independent breakdown of 4 key rewards.

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