ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. Leonardo DRS's annualized return on capital (ROC %) for the quarter that ended in Mar. 2026 was 7.08%.
As of today (2026-06-25), Leonardo DRS's WACC % is 6.68%. Leonardo DRS's ROC % is 8.64% (calculated using TTM income statement data).
Leonardo DRS generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
Leonardo DRS (NAS:DRS) ROC % Explanation
ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.
There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.
Why is ROC % important?
Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.
As of today, Leonardo DRS's WACC % is 6.68%. Leonardo DRS's ROC % is 8.64% (calculated using TTM income statement data).
Leonardo DRS generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
Be Aware
Like ROE % and ROA %, ROC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.
Leonardo DRS ROC % Related Terms
Leonardo DRS ROC % Historical Data
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The historical data trend for Leonardo DRS's ROC % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Note:
The Operating Income data used here is four times the quarterly (Mar. 2026) data.
The tax rate is limited to between 0% and 100%.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Leonardo DRS (DRS) has a ROC % of 7.08% as of Mar. 2026. Return on capital is the ratio of current-period net income to average two-period capital. View historical data on Leonardo DRS and its competitors.
Is Leonardo DRS's ROC % too high?
Leonardo DRS's current ROC % is 7.08%. The Aerospace & Defense industry median ROC % is 4.45. Leonardo DRS's value of 7.08% is 59.1% above this industry median. Overall, Leonardo DRS has a GF Score™ of 79/100 and is considered Modestly Overvalued, reflecting its overall financial health beyond just this single metric.
How does Leonardo DRS's ROC % compare to HII and KTOS?
Leonardo DRS's ROC % of 7.08% can be compared against companies in the Aerospace & Defense industry. The industry median ROC % is 4.45. Leonardo DRS's value of 7.08% is 59.1% above this benchmark. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good ROC % for an Aerospace & Defense company?
The median ROC % among Aerospace & Defense companies is 4.45, based on 351 companies in the industry. Companies in the top quartile (top 25%) have a ROC % significantly above this median, while those in the bottom quartile fall well below. However, ROC % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Leonardo DRS's current ROC % of 7.08% is 59.1% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high ROC % mean?
A high ROC % can signal that a stock is expensive relative to its fundamentals. Return on capital is the ratio of current-period net income to average two-period capital. View historical data on Leonardo DRS and its competitors. For the Aerospace & Defense industry, the median ROC % is 4.45 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Leonardo DRS's current ROC % is 7.08%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Leonardo DRS stock overvalued right now?
Based on GuruFocus' analysis, Leonardo DRS (DRS) is currently considered Modestly Overvalued. The stock's GF Value™ is $35.46, compared to a current price of $44.36 — trading 25.1% above its estimated fair value. The current ROC % is 7.08% and 59.1% above the Aerospace & Defense industry median of 4.45. Leonardo DRS's overall GF Score™ is 79/100 with 2 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is ROC % calculated?
ROC % is calculated from a company's financial statements. For Leonardo DRS (DRS), the current ROC % is 7.08% as of Mar. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Leonardo DRS (DRS) Overvalued in 2026?
Based on GuruFocus' analysis, Leonardo DRS stock appears to be overvalued.
The current stock price of $44.36 is trading 25.1% above its estimated GF Value™ of $35.46.
GuruFocus considers Leonardo DRS to be Modestly Overvalued.
Key valuation signals for DRS:
ROC %: 7.08%
GF Value™: $35.46 vs. price of $44.36 (25.1% above fair value)
Industry Position: 59.1% above the Aerospace & Defense median
No single metric tells the full story. See the DRS stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Leonardo DRS Inc is a provider of defense products and technologies that are used across land, air, sea, space, and cyber domains. It is in the design, development, and manufacture of Advanced sensing, network computing, force protection, and electric power and propulsion technologies and solutions. The company has two segments: Advanced Sensing and Computing, which generates the majority of revenue, and the Integrated Mission Systems segment. The Advanced Sensing and Computing segment is engaged in designing, developing, and manufacturing sensing and network computing technology that enables real-time situational awareness required for enhanced operational decision-making and execution by the customers.
79GF Score
Get the complete analysis for DRS
ROC % is just one metric. See GF Value™, 30-year financials, guru trades, warning signs, and more.
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