CW vs DRS

Key Takeaways

• Both CW and DRS operate in the aerospace and defense sector, but CW maintains a broader industrial portfolio that includes commercial nuclear and power markets, while DRS focuses more narrowly on advanced defense sensing and electronic systems.
• Curtiss-Wright delivered record full-year 2025 results with $3.5 billion in sales, while Leonardo DRS reported $3.65 billion — making the two companies closely matched in revenue scale despite significantly different market capitalizations.
• CW has demonstrated superior profitability with an adjusted operating margin of 18.6%, roughly 600 basis points above DRS's Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margin of 12.4%.
• DRS holds an $8.7 billion backlog, more than double CW's $4.1 billion, signaling potentially stronger long-term revenue visibility from existing contract commitments.
• Both companies posted identical 1.2x book-to-bill ratios for full-year 2025, indicating healthy demand pipelines across the board.
• Recent momentum heavily favors CW, whose stock has appreciated approximately 37% year-to-date through mid-2026, compared to roughly 42% for DRS — though CW's multi-year compound return remains substantially higher.

Introduction

The aerospace and defense sector has been one of the strongest-performing areas of the U.S. equity market in recent years, driven by heightened global defense spending, naval fleet expansion programs, and renewed investment in nuclear energy infrastructure. Within this landscape, Curtiss-Wright Corporation (CW) and Leonardo DRS, Inc. (DRS) represent two distinct yet overlapping approaches to defense and industrial technology. Both companies serve the U.S. Department of Defense and allied nations, but their business models, end-market exposure, and financial profiles differ in ways that may matter to investors evaluating relative positioning. This comparison examines how these two stocks stack up across key operational, financial, and market-driven dimensions.

CW Overview and Recent Performance

Curtiss-Wright Corporation (CW) is a diversified global engineering firm that provides highly engineered products and services across three primary segments: Aerospace & Industrial, Defense Electronics, and Naval & Power. With approximately 9,100 employees and a market capitalization near $27.7 billion, the company has deep roots in naval propulsion systems — having supported every U.S. nuclear submarine and aircraft carrier commissioned over the past six decades.

In recent weeks, CW has been propelled by several favorable developments. The company reported record full-year 2025 financial results, including $3.5 billion in sales (up 12% year-over-year), adjusted diluted earnings per share (EPS) of $13.23 (up 21%), and record free cash flow (FCF) of $554 million, representing 111% FCF conversion. In early July 2026, CW announced an $80 million multi-year investment to expand its Cheswick, Pennsylvania facility — a site critical to naval defense and commercial nuclear manufacturing — a move expected to create approximately 150 jobs and supported by state and Department of Defense funding. Additionally, the company secured contracts valued in excess of $250 million to supply propulsion valves, pumps, and advanced control systems for Virginia-class and Columbia-class submarines and Ford-class aircraft carriers. These catalysts have reinforced bullish sentiment, contributing to the stock's roughly 37% year-to-date gain and an all-time closing high above $790 in early July 2026.

DRS Overview and Recent Performance

Leonardo DRS, Inc. (DRS) is a leading provider of advanced defense technologies headquartered in Arlington, Virginia. The company specializes in advanced sensing, network computing, force protection, and electric power and propulsion systems for the U.S. military, intelligence agencies, and allied forces. With a market capitalization of approximately $12.8 billion, DRS is majority-owned by Leonardo S.p.A., the Italian aerospace and defense conglomerate.

DRS posted solid full-year 2025 results, with revenues reaching $3.65 billion (up 13% year-over-year), net earnings of $278 million (up 31%), and adjusted diluted EPS of $1.15 (up 24%). The company's total backlog stood at $8.7 billion at year-end, reflecting a 1.2x book-to-bill ratio for the year. In recent market activity, DRS shares have climbed roughly 42% year-to-date through mid-2026, trading near all-time highs above $48 per share. The company has also been expanding its product portfolio; recent launches include a new line of AI-enabled Rugged Smart Displays for ground vehicles, positioning DRS to capture demand for next-generation combat vehicle electronics. DRS initiated 2026 guidance calling for revenue between $3.85 billion and $3.95 billion and adjusted diluted EPS of $1.20 to $1.26, signaling continued operational momentum.

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Head-to-Head Comparison

While both CW and DRS derive the majority of their revenues from defense-related contracts, their business structures diverge meaningfully. CW's portfolio is built around three balanced segments, with roughly 69% of revenue coming from aerospace and defense and 31% from commercial markets — including a significant and growing nuclear power vertical. This diversification provides some insulation from defense budget cycles. DRS, by contrast, is almost entirely defense-focused, which can amplify upside during periods of elevated military spending but also concentrates risk.

On profitability, CW holds a clear advantage. Its 18.6% adjusted operating margin and return on equity (ROE) of approximately 20% significantly outpace DRS, whose Adjusted EBITDA margin of 12.4% reflects a structurally different cost profile. However, DRS counters with a backlog that is more than twice as large as CW's — $8.7 billion versus $4.1 billion — offering greater visibility into future revenue streams and potentially insulating the company from near-term demand fluctuations.

Valuation presents another key contrast. CW trades at a price-to-earnings (P/E) ratio of approximately 55, reflecting its premium profitability and strong multi-year track record of compounding shareholder returns. DRS, with a P/E near 35, appears comparatively less expensive on an earnings multiple basis — though its lower margin structure and more concentrated business model partially explain the discount. In terms of capital allocation, CW has been aggressively repurchasing shares (a record $465 million in 2025), while DRS has focused on organic reinvestment and product development. Both stocks have benefited from the broader defense sector rally, but CW's five-year total return of over 550% dwarfs DRS's performance, reflecting CW's longer track record of compounding value.

Tickeron AI Verdict

Based on observable financial and market data, Tickeron's AI-driven analytical framework would likely favor Curtiss-Wright (CW) in the current environment, though the preference is probabilistic rather than absolute. CW's combination of superior operating margins, stronger return on equity, more diversified end-market exposure, aggressive capital return program, and a clear track record of compounding earnings growth presents a compelling profile for trend-following and quality-focused AI models. The recent $80 million facility expansion and $250 million-plus naval contract wins provide fresh catalysts that reinforce existing momentum. That said, Leonardo DRS (DRS) should not be dismissed — its massive $8.7 billion backlog, higher top-line growth guidance for 2026, and narrower valuation multiple could appeal to AI strategies oriented toward value or mean reversion. Ultimately, the relative stability, profitability, and multi-year trend consistency of CW give it a modest edge in the current market configuration, though both stocks remain well-positioned within a sector enjoying sustained tailwinds.

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