DRS Posts Record Backlog as Shares Slide on Raft Deal
Leonardo DRS reported its strongest quarterly EPS growth in at least four quarters — adjusted diluted earnings per share up 52% year over year — and extended its book-to-bill streak to 18 consecutive
DRS Posts Record Backlog as Shares Slide on Raft Deal
NEW YORK, August 25 —
Leonardo DRS, Inc. (DRS) reported adjusted diluted EPS up 52% year over year in Q2 2026, raised full-year guidance, and extended its book-to-bill streak to 18 consecutive quarters above 1.0x, yet shares fell 4.2% on earnings day to $39.01, below every insider sale recorded in the prior 90 days.
- Q2 revenue $913 million, up 10%; adjusted EBITDA $128 million, up 33%; margin 14.0%, 240 basis points wider.
- Adjusted EPS $0.35, beat consensus by 29.2%; full-year EPS guidance raised to $1.34, $1.39 from $1.26, $1.30.
- $450 million all-cash Raft LLC acquisition announced July 28; CEO Baylouny sold 36,471 shares at $45.67 on June 18.
Eighteen Quarters of Discipline
DRS, which designs electro-optic sensors and signals intelligence hardware through its Advanced Sensing and Computing segment, and builds electrical propulsion systems for U.S. Navy ships and submarines through Integrated Mission Systems, has now produced a book-to-bill at or above 1.0x for 18 consecutive quarters, reaching a record funded backlog at Q2's end. The IMS segment grew revenue 15% year over year, outpacing the company's 10% overall rate. DRS has topped consensus EPS in each of the past four quarters, by 3.6%, 13.5%, 29.4%, and 29.2% respectively, a streak that ordinarily invites multiple expansion, not a selloff.
What $450 Million Commits
The market has two concrete explanations. On July 28, DRS filed an 8-K announcing a $450 million all-cash agreement to acquire Raft LLC, a multi-domain AI, data fusion, and mission software company expected to expand DRS's presence in the Air Force, Space Force, and intelligence community. CEO Baylouny described Raft as complementary to "core strengths in sensing, computing, and mission systems." Management guided Q3 2026 EBITDA margin in the mid-13% range, below Q2's 14.0%, citing non-recurring program risk retirement gains that lifted Q2 results and will not repeat. Full-year EBITDA guidance was raised to $525 million, $540 million. Investors can model the acquisition's impact using the DCF calculator.
| Ticker | Mkt cap | Fwd P/E | 52-wk |
|---|---|---|---|
| DRS | $10.4B | 26.5x | -7.0% |
| CW | $22.7B | 35.9x | +25.2% |
| ESLT | $34.2B | 39.8x | +49.0% |
| AIR | $5.4B | 20.6x | +79.5% |
| MRCY | $5.4B | 40.7x | +32.5% |
| HWM | $105.0B | 41.0x | +49.7% |
The Insider Gap
The insider sales frame the question investors will carry into Q3. COO Sally Wallace sold at $50.00 on June 11, and CEO Baylouny sold 36,471 shares at $45.67 on June 18, six weeks before the earnings release, with shares now trading at $39.01. The numbers to watch are Q3 revenue against the guided $1 billion threshold and whether the full-year EBITDA range holds once Raft closes in Q4 2026. Run the free Leonardo DRS, Inc. deep-dive → to track current numbers as those checkpoints approach.
Basis Report is independent research for informational purposes. It is not investment advice and not a recommendation to buy or sell any security.
Leonardo DRS reported its strongest quarterly EPS growth in at least four quarters — adjusted diluted earnings per share up 52% year over year — and extended its book-to-bill streak to 18 consecutive quarters above 1.0x, yet shares fell 4.2% on earnings day and now trade at $39.01, a price below every open-market insider sale recorded in the past 90 days, which ranged from $45.37 to $50.00.