LEONARDO DRS INC (NASDAQ:DRS): An Affordable Growth Stock in Focus

Investors looking for growth chances at fair prices often use the "Affordable Growth" method, which focuses on companies showing good expansion prospects without high prices. This method selects stocks with strong growth paths, good profit generation, and sound financial conditions, while making sure they are still fairly valued. By weighing these core elements, the method works to find companies set for continued results without the high prices usually linked to fast-growing stocks. One stock appearing from this selection process is LEONARDO DRS INC (NASDAQ:DRS).

Growth Path

Leonardo DRS displays notable growth features that fit well with affordable growth standards. The company's past results indicate considerable expansion, and future estimates point to ongoing positive movement.

• Earnings Per Share has grown by a notable 26.44% over the past year
• Revenue rose by 12.27% in the last year with a substantial 135.87% average growth over recent years
• Future EPS growth is estimated at 12.13% each year, with revenue predicted to grow by 7.27%

These growth numbers show the company's capacity to increase both total revenue and net profit, a key pairing for growth investors. The good past growth gives assurance in management's ability to perform, while the estimated growth rates imply continued positive movement going forward.

Valuation Check

The valuation situation shows a notable pattern for Leonardo DRS. While some standard measures look high, relative study shows better appeal compared to its industry.

• P/E ratio of 30.22 seems high but is better than 76.06% of industry peers
• Forward P/E of 26.20 looks good next to the S&P 500 average of 34.46
• Enterprise Value to EBITDA ratio places the company more fairly than 70.42% of industry rivals
• PEG ratio shows suitable valuation when considering growth estimates

This valuation picture supports the affordable growth idea by showing that while some valuation numbers may appear elevated, the company is valued at fair levels relative to both its growth prospects and industry standing.

Financial Condition and Profit Generation

Beyond growth and valuation, Leonardo DRS keeps basic strength in financial condition and operational profit generation, adding stability to the growth narrative.

The company's financial condition score of 7/10 shows good solvency measures, including a Debt to Equity ratio of 0.12 that is better than 77.46% of industry peers. The Altman-Z score of 3.93 suggests very low failure risk, while the Current Ratio of 2.00 provides adequate short-term bill payment ability.

Profit generation measures present a varied but overall acceptable picture with a score of 6/10. Return on Invested Capital of 9.17% puts the company in the higher group of its industry, performing better than 80.28% of competitors. However, margin reduction in recent times needs watching, as both net and operating margins have displayed decreases while staying competitive within the field.

Investor Points

The mix of good growth, fair valuation, and sound financial bases makes Leonardo DRS an interesting option for investors using affordable growth methods. The company's place in defense technologies offers some cyclical stability, while its growth path indicates possibility for continued expansion.

While the wider market displays mixed signs with a negative long-term S&P 500 direction but positive short-term movement, Leonardo DRS's basic profile seems durable. The company's focus on modern sensing, network computing, and essential mission technologies places it well in the changing defense environment.

For investors wanting to find comparable chances, more affordable growth options are available using our predefined selection method. A more in-depth basic analysis of Leonardo DRS can be seen in our detailed basic report.

Disclaimer: This article presents factual information for educational purposes only and does not constitute investment advice, recommendation, or endorsement of any security. Investors should conduct their own research and consult with financial advisors before making investment decisions.