Leonardo DRS (DRS) Rising
Shares of February 21 new addition Leonardo DRS (DRS) are on the rise today after the company reported a modest Q4 beat this morning. Revenue rose 12.9% to $926 million (beat by $46 million) while EPS of $0.31 beat by a penny. The strength came from the Advanced Sensing & Computing (ASC) division (thanks to advanced sensing programs like tactical radars & communications) while the Integrated Mission Systems (IMS), which includes electric power and propulsion, slightly underperformed as some ground systems programs were a little slow to convert to revenue. The Columbia-class nuclear sub program (General Dynamics Electric Boat) program continues to go well, and management disclosed it’s building a new facility in South Carolina to support the program and open the door for other electric power and propulsion opportunities. Turning to guidance for 2024, management said we should look for 4% to 7% revenue growth ($2.95 - $3.03 billion), which straddles consensus estimates. EPS should be in the range of $0.74 to $0.82 (consensus is $0.83, suggesting some conservatism in guidance). Overall, a better-than-expected quarter, and guidance is very solid, with upside potential. In short, exactly what we wanted. Stock looks good. BUY
