Buffett Brain · Research note
Score updated 5 Oct 2026 · analysis from 3 Jul 2026
LDO.MI· Industrials
Leonardo
Leonardo S.p.a. struggles with weak margins and below-average returns, failing to meet Buffett's criteria for a wonderful business.
Buffett fit
Weak fit
Owner
9
Durability
72
Management
55
Price
29
Score updated 5 Oct 2026 · analysis from 3 Jul 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Industrials stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If I owned 100% of Leonardo, I would focus on improving operational efficiency and exploring new markets to enhance margins.
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Leonardo's business is profitable, with consistent profitability over the past five years, but it faces challenges with a of 9.4%, which is below the sector top-quintile cutoff of 13.6%.
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Leonardo's share count has remained relatively flat with a 5-year CAGR of 0.08%, indicating a conservative approach to .
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With an yield of 2.37% and a of 25.3, the valuation appears stretched compared to Buffett's preferred range of 8-10%.
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- The full reasoning behind all four pillars
- The 5-year price target and the return it implies
- What would change the call
- Graham, Lynch and Greenblatt on the same stock
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
5- 1Revenue of $19.5B indicates a sizable operation in the aerospace and defense sectors.
- 2Consistent profitability over the last five years, with net income of $1.22B.
- 3Interest coverage ratio of 18.2 shows strong ability to meet interest obligations.
- 4 of $734M indicates positive cash generation.
Concerns
5- 1 of 11.6% is significantly below the sector top-quintile cutoff of 43.4%.
- 2 of 9.4% is below the sector top-quintile cutoff of 13.6%, indicating weak capital efficiency.
- 3 of 8.8% is below the sector's top-quintile cutoff of 17.7%.
- 4Current ratio of 0.98 indicates potential liquidity issues, as it is below 1.5.
Price history
$47.39+604.6%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Leonardo S.p.a. operates in the aerospace and defense sectors, generating revenue primarily from helicopters, defense electronics, and aircraft manufacturing. The company reported $19.5B in revenue, with a net income of $1.22B, yielding a 6.3% net margin. The business model relies heavily on government contracts and defense spending, which can be cyclical and sensitive to budget changes.
How this analysis has moved
The call has held across 2 reviews.
Sep 27, 2026 → Oct 4, 2026
What other investors would say
The same company, judged by three other documented playbooks.
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