Key Highlights

● Third-quarter bookings topped $1.6 billion, a book-to-bill ratio of 1.5.

● Revenue rose to $1.066 billion and adjusted Earnings reached $0.46 a share.

● Leonardo DRS now expects 2026 Revenue of $3.95 billion to $3.98 billion.

● Shares closed at $39.60 as defense stocks rallied against a falling Nasdaq Composite.

Leonardo DRS (NASDAQ:DRS) raised its full-year outlook after a third quarter of robust orders and growing revenue, sending the defense-technology company's shares sharply higher on Thursday.

Orders pour in

Defense electronics maker Leonardo DRS showed on Thursday, October 29, that new orders are running well ahead of the revenue it is recognizing.

The company reported bookings above $1.6 billion for the third quarter, according to one report, giving it a book-to-bill ratio of 1.5. That means it took in roughly $1.50 of new orders for every dollar of revenue it recognized, a sign that its Backlog is growing.

Revenue rose to $1.066 billion on organic growth, and adjusted earnings reached $0.46 a share, the report said.

The stock jumped on the news, closing at $39.60, according to the same report, one of the standout gainers on the Nasdaq Composite.

A higher outlook

The strong order book gave management confidence to raise its forecasts. Leonardo DRS now expects 2026 revenue of $3.95 billion to $3.98 billion, the report said. It also lifted its adjusted earnings guidance to $1.50 to $1.53 a share, above the $1.39 analysts had expected.

Raising the full-year outlook in the third quarter matters because only one quarter remains in the year. A higher forecast at this stage suggests management is confident about fourth-quarter deliveries.

What Leonardo DRS does

Leonardo DRS supplies advanced defense technology to the U.S. military and allied governments. Its products include sensing systems, tactical communications, power and propulsion equipment for naval vessels, and electronic systems used in combat vehicles and aircraft. The company is majority-owned by Italian defense group Leonardo.

A defense rally

Leonardo DRS was part of a broader surge in defense stocks. Huntington Ingalls (NYSE:HII), the nation's largest military shipbuilder, soared after its third-quarter earnings and revenue beat forecasts. Textron (NYSE:TXT) rallied on a beat and raised guidance, and L3Harris (NYSE:LHX) reported sales and earnings above estimates.

The rally came as investors rotated out of mega-cap technology after Alphabet (NASDAQ:GOOGL)'s revenue miss revived worries about the cost of artificial-intelligence spending. The Nasdaq Composite tumbled 365.13 points to 26,184.72, while the S&P 500 slipped 23.59 points to 7,720.39. The Dow lost 132.54 points to 52,342.56.

Geopolitics also kept defense in focus. Oil prices remained elevated, with WTI settling at $102.00 a barrel and Brent at $114.88, amid conflict involving Iran, Houthi strikes on Saudi energy facilities and reports from Iran's Revolutionary Guard that three tankers hit sea mines south of the Strait of Hormuz.

"There's plenty of other places to go with your money outside of the AI trade that have pretty decent prospects," one market strategist said, according to media reports.

A strong economy, a watchful Fed

Third-quarter GDP grew faster than expected, accelerating from the second quarter, and Business Investment surged. But September PCE Inflation ran hot, keeping a December rate hike in play after the Federal Reserve held steady on Wednesday. Fed Chair Kevin Warsh said: "It's our responsibility to get inflation down."

What to watch

The key question for Leonardo DRS is how quickly it can convert its swelling order book into revenue. A book-to-bill well above one is a strong signal, but execution on production and deliveries will determine whether the backlog translates into the growth investors now expect.

The fourth-quarter report will show whether the company lands within its raised guidance. Defense budgets and the geopolitical backdrop, including the U.S. midterm elections on November 3 and tensions in the Middle East, will also shape sentiment toward the sector. Friday's Employment Cost index and the Fed's December 8–9 meeting round out the near-term calendar.