Leonardo DRS, Inc. DRS, with a strong backlog, rising earnings estimates and efficient debt management, 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) has increased 0.9% to $1.07 per share in the past 60 days. The Zacks Consensus Estimate for Leonardo DRS’ total revenues for 2025 stands at $3.43 billion, which indicates year-over-year growth of 7.4%.

The company’s long-term (three to five years) earnings growth is 21.2%. It delivered an average earnings surprise of 22.27% in the last four quarters.

Debt Position of DRS
 

Currently, Leonardo DRS’ total debt to capital is 12.92%, much better than the industry’s average of 54.03%.

Leonardo DRS’ times interest earned ratio (TIE) at the end of the third quarter of 2024 was 10.5. The TIE ratio of more than 1 indicates that the company will be able to meet its interest payment obligations in the near term without any problems.

DRS’ Liquidity
 

The company’s current ratio at the end of the third quarter of 2024 was 2.11, higher than the industry’s average of 1.43. 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 Sept. 30, 2024 increased 75.1% to $8.26 billion from the year-ago quarter’s reported figure. The acceptance of a multi-boat contract to assist electric propulsion activities on the Columbia Class submarine program with the U.S. Navy was the primary driver of the backlog rise.

DRS Stock Price Performance
 

In the past six months, DRS shares have rallied 27.2% compared with the industry’s growth of 18.4%.

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Other Stocks to Consider
 

A few other top-ranked stocks from the same industry are Astronics Corporation ATRO, which sports a Zacks Rank #1 (Strong Buy), and AerSale ASLE and Mercury Systems MRCY, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for ATRO’s 2025 EPS is pegged at $1.17 per share, which indicates growth of 129.4% from the 2024 estimated figure. The Zacks Consensus Estimate for ATRO’s 2025 total revenues stands at $837.8 million, which indicates growth of 7.6% from the 2024 estimated figure.

The Zacks Consensus Estimate for ASLE’s 2025 EPS is pegged at 42 cents, which calls for growth of 183.3% from the 2024 estimated figure. The Zacks Consensus Estimate for ASLE’s 2025 total revenues stands at $421.6 million, which indicates growth of 23% from the 2024 estimated figure.

Mercury Systems’ long-term earnings growth rate is 13.2%. The Zacks Consensus Estimate for MRCY’s fiscal 2025 sales is pegged at $848.9 million, which implies an improvement of 1.6% from the fiscal 2024 reported figure.

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