Leonardo DRS, Inc.

Section 1: Company Overview and Fundamentals

1.1 Company Overview:

Leonardo DRS, Inc (NASDAQ: DRS) develops and delivers advanced defense technologies primarily for U.S. national security agencies and allied nations. The company focuses on the engineering, production, and integration of sophisticated sensing systems, network computing solutions, force protection technologies, and electric power and propulsion platforms, along with other mission-critical capabilities. Its products support operations across land, air, maritime, space, and cyber domains. The company operates through two core business segments: Advanced Sensing and Computing (ASC) and Integrated Mission Systems (IMS).

Kalkine’s Diversified Opportunities Report covers the Company Overview, Key positives & negatives, Investment summary, Key investment metrics, Top 10 shareholding, Business updates and insights into company recent financial results, Key Risks & Outlook, Price performance and technical summary, Target Price, and Recommendation on the stock.

Stock Performance:

• The stock is currently trading around USD 40.05, consolidating within a broad 12-month range of approximately USD 28 to USD 49.
• Price has reclaimed both the 20-day moving average (USD 39.95) and the 50-day moving average (USD 37.90), indicating improving short-term momentum. The 20-day moving average is positioned above the 50-day moving average, reflecting a mild near-term bullish bias.
• Recent price action shows consolidation after a pullback from early-2026 highs, suggesting profit-taking rather than a structural breakdown.
• The RSI (14) near 56 indicates neutral-to-moderately bullish momentum, with no overbought or oversold conditions.
• Volume remains moderate, suggesting the stock may be awaiting a catalyst for a decisive breakout or breakdown.               

1.2 The Key Positives, Negatives, and Investment summary  

1.3 Top 10 shareholders:

The top 10 shareholders together form ~ 82.53% of the total shareholding, signifying concentrated shareholding. Leonardo SpA and The Vanguard Group, Inc. are the biggest shareholders, holding the maximum stake in the company at 71.33% and 2.89%, respectively.

1.4 Key Metrics:

Margin Expansion Supported by Volume Growth, Moderated by Strategic R&D Investment

The margin trends reflect a combination of volume-driven operating leverage and continued strategic reinvestment. Gross margin improved year-over-year, supported by stronger program execution and higher volumes across counter-UAS and electric power and propulsion platforms, which enhanced cost absorption and manufacturing efficiency. EBITDA margin remained broadly stable as the benefits of higher revenue were largely offset by increased internal R&D spending and program mix pressures. Operating and pretax margins expanded due to improved operating earnings and slightly lower net interest expense, demonstrating better bottom-line conversion. Net margin also strengthened, aided by higher profitability and a modestly lower effective tax rate. Overall, the company is translating revenue growth into earnings expansion, though margin improvement remains moderated by elevated investment in innovation and mix dynamics relative to the industry median.

Section 2: Business Updates and Corporate Business Highlights

2.1 Recent Business Updates

2.2 Insights of Q3FY25:

Section 3: Key Risks & Outlook

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

Stock Performance:

• The stock is currently trading around USD 40.05, consolidating within a broad 12-month range of approximately USD 28 to USD 49.
• Price has reclaimed both the 20-day moving average (USD 39.95) and the 50-day moving average (USD 37.90), indicating improving short-term momentum. The 20-day moving average is positioned above the 50-day moving average, reflecting a mild near-term bullish bias.
• Recent price action shows consolidation after a pullback from early-2026 highs, suggesting profit-taking rather than a structural breakdown.
• The RSI (14) near 56 indicates neutral-to-moderately bullish momentum, with no overbought or oversold conditions.
• Volume remains moderate, suggesting the stock may be awaiting a catalyst for a decisive breakout or breakdown.

 4.2 Fundamental Valuation

Valuation Methodology: Price/Earnings Multiple Based Relative Valuation

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is February 19, 2026. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: The report publishing date is as per the Pacific Time Zone.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

 Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

 Stop-loss: It is a level to protect against further losses in case of unfavorable movement in the stock prices.