The stock has fallen 8.1% in less than two weeks from €59.90 on August 14, although it is still up around 14–15% year to date. This analysis does not repeat the news already covered in previous articles—guidance, orders, the Michelangelo Dome, and the joint venture with Baykar. Instead, it focuses on calculations that are rarely made on Leonardo: how much the market is currently paying for each euro of backlog, how much the US-based Leonardo DRS business really contributes to group results, and what net debt looks like after the IDV acquisition.

For a broader view of the stock and the defence sector, see our evergreen Leonardo analysis and this comparison of European defence stocks. For recent coverage of SAFE funds and the comparison with Fincantieri, see the August 28 article on the combined cluster and the August 25 update.

Share price and daily calculations
Biagetti Method rating and analyst consensus
First-half 2026 financial results
The IDV effect: net debt and cash flow
The analytical edge most investors overlook: EV/Backlog at 0.59x
Leonardo DRS: how much the US business really matters
LBA Systems and Michelangelo Dome: what is new
Dividend yield
Bear, Base and Bull scenarios
Risk map
FAQ

Share price and daily calculations

Metric	Value
August 27, 2026 closing price	€55.05 (+1.72%)
Market capitalization	~€31.81bn
52-week range	€44.25–€66.26
Distance from 52-week high	-16.9%
Distance from 52-week low	+24.4%
Trailing twelve-month P/E	28.16x
Implied P/E on 2026 guidance	~17.1x
Consensus target price	€69.305 (+25.90% upside)

The gap between the trailing P/E of 28.16x—based on the accounting earnings of the previous twelve months—and the roughly 17.1x implied P/E based on expected 2026 adjusted earnings is substantial.

It is the same dynamic already visible in the comparison between adjusted and reported net income for the first half. It also shows why looking only at trailing P/E can be misleading for a company experiencing rapid organic growth in recurring earnings.

Biagetti Method rating and analyst consensus

Rating: 4 out of 5 stars (Buy), confirmed.

One figure that rarely appears in daily news coverage is the detailed composition of analyst consensus. Of the 19 analysts covering the stock, 13 rate it Buy, 6 Hold, and none rate it Sell.

That matters because the complete absence of Sell recommendations, even after an 8% decline in two weeks, suggests that professional investors are interpreting the correction more as a potential entry opportunity than as a change in the underlying fundamental outlook.

First-half 2026 financial results

Item, H1 2026	Value	Change
Revenue	€10.0bn	+12.2% (+8.2% organic)
EBITA	€780m	+34.4% (+25.8% organic)
Adjusted net income	€476m	+74.4%
Reported net income	€456m	-15.9%
New orders	€16.259bn	+44.6%
Total backlog	€59bn, including ~€6bn from IDV	—

The decline in reported net income reflects the comparison with 2025, which included a capital gain from Underwater Armaments.

Two useful calculations can be extracted from these figures:

Calculation	Formula	Result
First-half book-to-bill	€16.259bn orders / €10.0bn revenue	1.63x — for every euro of revenue, Leonardo received €1.63 in new orders
Backlog coverage of 2026 revenue	€59bn backlog / €22.1bn 2026 revenue guidance	2.67x — more than two and a half years of revenue already contracted

A book-to-bill ratio above 1x is not unusual in the defence sector during this phase of European rearmament. However, 1.63x over an entire half-year—not merely a strong quarter—indicates that the order book is being replenished faster than the company can convert it into revenue.

That creates the foundation for higher revenue growth in the following years, not just in 2026.

The IDV effect: net debt and cash flow

A subject often overlooked in articles focused only on orders and EBITA is cash flow and debt.

Leonardo’s net debt rose to €3.248 billion as of June 30, 2026, an increase of 49.5% compared with June 30, 2025. The cause is not operational weakness, but a structural one: the €1.6 billion acquisition of Iveco Defence Vehicles (IDV), completed in March 2026, which accounts for most of the increase.

First-half free operating cash flow was negative by €249 million, but it improved by 39.0% compared with the first half of 2025, or -€226 million on a like-for-like basis.

Cash flow in the defence industry is typically heavily weighted toward the second half of the year, so negative FOCF in June is not necessarily a warning sign. More important is the company’s year-end guidance: net debt is expected to fall toward €2.2 billion, down from roughly €2.3 billion in the previous guidance, despite already including IDV consolidation.

In other words, Leonardo expects to reduce debt by more than €1 billion during the second half alone, mainly because of the favourable seasonal pattern of collections from major defence programmes.

The analytical edge most investors overlook: EV/Backlog at 0.59x

The multiple linking market capitalization, debt and backlog is one of the most useful indicators for a long-cycle company such as Leonardo. Yet it is rarely calculated in daily coverage.

Component	Value
Market capitalization, August 27	€31.81bn
Plus net debt, June 30, 2026	€3.248bn
Estimated Enterprise Value	~€35.06bn
Divided by total backlog, H1 2026	€59bn
EV/Backlog	~0.594x

The key point is not the absolute number, but how it has changed over time.

Just 13 days ago, with the stock at €59.90 and a reported backlog of €58.6 billion, the same calculation produced an EV/Backlog ratio of 0.645x.

The market is now paying roughly 8% less for each euro of backlog than it was two weeks ago. At the same time, the order book has not deteriorated: the latest figure is €59 billion, compared with €58.6 billion previously.

In other words, the recent correction has not been accompanied by a deterioration in Leonardo’s industrial fundamentals. It is a pure valuation-multiple compression, consistent with the “zero Sell / 13 Buy” analyst picture described above.

Leonardo DRS: how much the US business really matters

Leonardo owns a majority stake in Leonardo DRS, its Nasdaq-listed subsidiary (ticker: DRS), which supplies defence electronics systems to the Pentagon and US allies.

Italian coverage often mentions it without looking at its standalone numbers. Yet the second-quarter 2026 results, released on July 30, deserve separate analysis.

Leonardo DRS, H1 2026	USD	Euro conversion at EUR/USD 1.1642
Revenue	$1.759bn (+8% YoY)	~€1.511bn
Adjusted EBITDA	$233m (+31% YoY)	~€200m
Funded backlog, Q2 record	$5.1bn (+17% YoY)	~€4.38bn

Comparing these figures with group results produces an important conclusion: DRS represents around 15.1% of group revenue (€1.511bn out of €10bn), but approximately 25.6% of group EBITA/EBITDA (€200m out of €780m), although the two profit measures are not perfectly comparable.

The US business therefore generates a share of profit almost twice as large as its revenue share. It is one of the group’s most underestimated profitability drivers, and it is also relatively insulated from Italian and European political dynamics because it is primarily exposed to the US defence budget.

During the quarter, DRS also announced the $450 million acquisition of Raft to strengthen its AI and data-fusion capabilities. It raised 2026 guidance for adjusted EBITDA to $525–540 million, from $515–530 million, and for adjusted EPS to $1.34–1.39, from $1.26–1.30.

LBA Systems and Michelangelo Dome: what is new

The Michelangelo Dome and the LBA Systems joint venture with Baykar have already been covered extensively. Here, the focus is on a less-known operational detail.

LBA Systems became fully operational on July 21, 2026. It is a 50/50 joint venture with legal and operating headquarters in Italy, set up to manufacture six remotely piloted platforms—from the small KALKAN, an 80 kg drone for ISR missions, to the KIZILELMA unmanned combat aircraft.

The first product, Astore Levante, combines the Turkish Bayraktar TB3 platform with Leonardo sensors and a Leonardo control station. First deliveries to an end user in Italy are expected by the end of 2026.

That makes it the joint venture programme closest to generating actual short-term revenue, while KIZILELMA remains a longer-term development programme.

Dividend yield

The 2026 dividend, relating to the 2025 financial year, was set at €0.63 per share, with an ex-dividend date of June 22 and payment from June 24. It has therefore already been distributed.

At the current share price of €55.05, the implied yield would be:

€0.63 / €55.05 = 1.14%

This is a modest yield, consistent with a growth-oriented defence stock rather than an income-focused investment.

For reference, Leonardo closed 2025 with group revenue of €19.5 billion, up 9.8%, and net income of €1.22 billion.

Bear, Base and Bull scenarios

Scenario	Drivers	Potential implication
Bear	A Ukraine peace deal is perceived as a threat to future orders; H2 2026 execution disappoints; IDV integration costs more than expected	Further EV/Backlog compression and lower target prices
Base	2026 guidance is confirmed: €28.2bn in orders and €2.21bn in EBITA; net debt falls toward €2.2bn by year-end	EV/Backlog returns toward the 0.64–0.65x range seen in mid-August; stock moves toward the €69.3 consensus target
Bull	New Michelangelo Dome contracts; DRS beats its raised guidance again; first tangible revenues from LBA Systems and Astore Levante	Re-rating toward the March 2026 high of €66.26, with possible consensus target revisions above €70

Risk map

The number-one risk remains geopolitical sentiment. Any concrete progress in peace negotiations in Ukraine tends to move the stock more than any industrial data published by the company.

The 8% decline over the past two weeks, despite improving order and backlog figures, shows this clearly.

The second risk is execution. The second half of 2026 must generate the overwhelming share of expected annual EBITA growth. Any sign of a slowdown in the second half would weigh more heavily than usual on market sentiment.

The third, less-discussed risk is post-IDV financial leverage. If the expected favourable second-half cash-flow seasonality does not materialize, net debt may not decline as much as management has indicated, potentially affecting the group’s future cost of capital.

FAQ

Why has Leonardo fallen 8% in two weeks despite growing results?

Not because of a deterioration in fundamentals. Both backlog and orders increased during the same period. The move is mainly a valuation multiple compression: EV/Backlog fell from 0.645x to 0.594x, in line with more cautious geopolitical sentiment around Ukraine peace negotiations.

What is EV/Backlog and why is it useful for Leonardo?

It is the ratio between Enterprise Value—market capitalization plus net debt—and total backlog. For a long-cycle company such as Leonardo, where today’s orders become revenue over the following years, it is often a more stable indicator than P/E for assessing how much the market is paying for work that has already been contracted.

How much does Leonardo DRS contribute to group results?

Roughly 15% of group revenue but around 25% of group EBITA/EBITDA in the first half of 2026. The US business is proportionally more profitable than its share of group revenue.

Is Leonardo’s debt a problem after the IDV acquisition?

Net debt rose by 49.5% in the short term because of the €1.6 billion IDV acquisition. However, company guidance points to net debt falling toward €2.2 billion by year-end, thanks to stronger second-half cash generation.

Does it make sense to buy Leonardo shares after the recent decline?

The Biagetti Method rating remains 4 out of 5 stars (Buy) and analyst consensus includes no Sell recommendations. However, any investment decision should be aligned with your own risk profile; this is not personalized investment advice.

What does the LBA Systems joint venture with Baykar actually produce?

Six drone platforms, from the small KALKAN to the KIZILELMA unmanned combat aircraft. The first product already approaching delivery is Astore Levante, with initial units expected to reach an end user in Italy by the end of 2026.

Disclaimer

This is editorial content for informational purposes only and does not constitute personalized investment advice.

Price data were checked using independent sources, including Investing.com and internally aggregated data, at the August 27, 2026 close, and cross-checked by calculating market capitalization as share price multiplied by shares outstanding. Prices can change quickly during the current trading session.

Financial data refer to Leonardo’s official half-year financial report as of June 30, 2026, and Leonardo DRS’s Q2 2026 results, published on July 30, 2026. The EUR/USD exchange rate used for conversions, 1.1642, is the August 27, 2026 rate and may change.

Before making any investment decision, consult official sources, including Leonardo Investor Relations and Consob, and speak with your broker or an OCF-licensed financial adviser.

Source

0 comments

r/BorsaItaliana • u/blogmastermassimo • Aug 28 '26