Leonardo DRS, Inc. DRS, with a strong backlog, rising earnings estimates and better 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 #1 (Strong Buy) company a strong investment pick at the moment.

DRS’ Growth Projections & Surprise History
 

The Zacks Consensus Estimate for DRS’ 2024 earnings per share (EPS) has increased 7.1% to 90 cents in the past 60 days. The Zacks Consensus Estimate for Leonardo DRS’ total revenues for 2024 stands at $3.20 billion, which indicates year-over-year growth of 13.2%.

The company’s long-term (three to five years) earnings growth is 18%. 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 52.13%.

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 1.54. 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.  Such a robust backlog increase indicates solid revenue growth prospects for the company.

DRS Stock Price Performance
 

In the past six months, DRS shares have rallied 49.5% compared with the industry’s growth of 19.9%.

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Other Stocks to Consider
 

A few other top-ranked stocks from the same industry are Curtiss-Wright Corp. CW, HEICO Corporation HEI and BAE Systems BAESY, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Curtiss-Wright delivered an average earnings surprise of 12.78% in the last four quarters. The Zacks Consensus Estimate for CW’s total revenues for 2024 stands at $3.08 billion, which indicates growth of 8.1% from the 2023 reported figure.

HEICO’s long-term earnings growth rate is 19.4%. The Zacks Consensus Estimate for HEI’s total revenues for fiscal 2024 stands at $3.89 billion, which suggests year-over-year growth of 31.1%.

BAE Systems’ long-term earnings growth rate is 12.4%. The Zacks Consensus Estimate for BAESY’s 2024 sales is pegged at $36.22 billion, which implies an improvement of 37.7% from the 2023 reported sales figure. 

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