Leonardo DRS (NASDAQ:DRS) vs. Ducommun (NYSE:DCO) Critical Review

Leonardo DRS (NASDAQ:DRS) and Ducommun (NYSE:DCO) are both aerospace companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, earnings, profitability, risk, dividends, institutional ownership and valuation.

Institutional and Insider Ownership

18.8% of Leonardo DRS shares are held by institutional investors. Comparatively, 92.2% of Ducommun shares are held by institutional investors. 0.3% of Leonardo DRS shares are held by insiders. Comparatively, 8.9% of Ducommun shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Leonardo DRS and Ducommun”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Leonardo DRS	$3.23 billion	3.41	$213.00 million	$0.93	44.61
Ducommun	$786.55 million	1.70	$31.50 million	$2.33	38.48

Leonardo DRS has higher revenue and earnings than Ducommun. Ducommun is trading at a lower price-to-earnings ratio than Leonardo DRS, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Leonardo DRS has a beta of 0.65, suggesting that its share price is 35% less volatile than the S&P 500. Comparatively, Ducommun has a beta of 1.38, suggesting that its share price is 38% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings for Leonardo DRS and Ducommun, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Leonardo DRS	0	2	5	0	2.71
Ducommun	0	0	5	0	3.00

Leonardo DRS presently has a consensus target price of $46.2857, indicating a potential upside of 11.56%. Ducommun has a consensus target price of $97.50, indicating a potential upside of 8.73%. Given Leonardo DRS’s higher possible upside, analysts plainly believe Leonardo DRS is more favorable than Ducommun.

Profitability

This table compares Leonardo DRS and Ducommun’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Leonardo DRS	7.31%	11.02%	6.93%
Ducommun	5.03%	7.68%	4.63%

Summary

Leonardo DRS beats Ducommun on 8 of the 13 factors compared between the two stocks.

About Leonardo DRS

Leonardo DRS, Inc., together with its subsidiaries, provides defense electronic products and systems, and military support services. It operates through Advanced Sensing and Computing (ASC) segment, and Integrated Mission Systems (IMS) segments. The ASC segment designs, develops, and manufacture sensing and network computing technology that enables real-time situational awareness required for enhanced operational decision making and execution; and offers sensing capabilities span applications, such as missions requiring advanced detection, precision targeting and surveillance sensing, long range electro-optic/infrared, signals intelligence, and other intelligence systems including electronic warfare, ground vehicle sensing, active electronically scanned array tactical radars, dismounted soldier, and space sensing. This segment also provides network computing, which are utilized across a range of mission applications including platform computing on ground and shipboard for advanced battle management, combat systems, radar, command and control, tactical networks, tactical computing, and communications. The IMS segment designs, develops, manufacture, and integrates power conversion, control, and distribution systems, ship propulsion systems, motors and variable frequency drives, force protection systems, transportation, and logistics systems for the U.S. and allied defense customers. This segment also offers electrical propulsion systems, which includes power conversion, control, distribution, and propulsion systems, as well as power dense permanent magnet motors, energy storage systems and associated efficient, rugged, and compact power conversion, electrical actuation systems, as well as cooling technologies; and motor controllers, instrumentation and control equipment, electrical actuation systems, and thermal management systems. The company was incorporated in 1968 and is based in Arlington, Virginia. Leonardo DRS, Inc. operates as a subsidiary of Leonardo S.p.A.

About Ducommun

Ducommun Incorporated provides engineering and manufacturing services for products and applications used primarily in the aerospace and defense, industrial, medical, and other industries in the United States. The company operates through two segments, Electronic Systems and Structural Systems. The Electronic Systems segment provides cable assemblies and interconnect systems; printed circuit board assemblies; electronic, electromechanical, and mechanical components and assemblies, as well as lightning diversion systems; and radar enclosures, aircraft avionics racks, shipboard communications and control enclosures, printed circuit board assemblies, cable assemblies, wire harnesses, interconnect systems, lightning diversion strips, surge suppressors, conformal shields, and other assemblies. The segment also supplies engineered products, including illuminated pushbutton switches and panels for aviation and test systems; microwave and millimeter switches and filters for radio frequency systems and test instrumentation; and motors and resolvers for motion control. In addition, this segment provides engineering expertise for aerospace system design, development, integration, and testing. The Structural Systems segment designs, engineers, and manufactures contoured aluminum, titanium, and Inconel aero structure components; structural assembly products, such as winglets, engine components, and fuselage structural panels; aerodynamic systems; and metal and composite bonded structures and assemblies comprising aircraft wing spoilers, large fuselage skins, rotor blades on rotary-wing aircraft and components, flight control surfaces, engine components, ammunition handling systems, and magnetic seals. It serves commercial aircraft, military fixed-wing aircraft, military and commercial rotary-wing aircraft, and space programs, as well as industrial, medical, and other end-use markets. The company was founded in 1849 and is headquartered in Santa Ana, California.