DroneShield Ltd (ASX: DRO) shares are starting October around $1.70 after a jump on the final day of last month.

Investors were buying the counter-drone technology company’s shares after it was awarded a major US procurement vehicle.

Does that make the shares a buy in October?

I think so, although investors need to be comfortable with plenty of volatility.

What does the US win actually mean?

DroneShield has been awarded an Indefinite Delivery, Indefinite Quantity contract supporting the US Joint Interagency Task Force 401 Domestic Shield initiative.

The vehicle has a maximum value of US$500 million over three years and is designed to provide a streamlined way for the US government to procure DroneShield’s counter-drone capabilities.

Importantly, that does not mean DroneShield has suddenly booked US$500 million of revenue.

Individual orders still need to be awarded under the agreement, and DroneShield says it will announce material orders as they occur.

For me, that distinction is important, but it does not take away from the significance of the announcement.

DroneShield has already delivered DroneSentry-X Mk2 systems in support of JIATF-401 requirements, including systems that have been installed and accepted on US military vehicles. The new agreement gives the company another pathway to supply its technology as the US expands counter-drone protection across military installations and other priority locations.

That is the sort of relationship I want to see developing.

The valuation is demanding

One thing that can’t be ignored is DroneShield’s valuation.

Consensus forecasts currently point to earnings per share (EPS) of around 1 cent in FY28.

At a $1.70 share price, that would put DroneShield shares on a PE ratio of roughly 170 times forecast FY28 earnings.

That is clearly expensive by almost any conventional measure. But I am not convinced that figure tells us everything about the company’s longer-term earnings power.

DroneShield is still investing heavily to become a much larger business. That includes manufacturing capacity, research and development, sales operations, and its international footprint.

Those costs can constrain reported earnings today while potentially creating the capacity to generate much more revenue later.

If US defence demand accelerates and DroneShield converts procurement vehicles like this one into substantial orders, I think profits could eventually scale much faster than the current EPS forecast suggests.

Why I would still buy

Counter-drone technology is becoming increasingly important as cheap and readily available drones change the nature of warfare and create new security challenges.

DroneShield is positioning itself directly in that market with technology spanning detection, electronic countermeasures, command and control, and sensor integration.

The latest US agreement gives me more confidence that its products are gaining traction with a strategically important customer.

But I would expect the journey to be bumpy. Defence contracts can be large and irregular, expectations around DroneShield are already high, and a valuation of around 170 times FY28 forecast earnings leaves little room for disappointment.

Foolish takeaway

I would buy DroneShield shares around $1.70, but I would go in expecting volatility.

The current earnings numbers make the shares look extremely expensive. For me, though, the bigger question is what earnings could look like once today’s investment starts translating into a much larger order book.

The new US procurement vehicle does not guarantee that outcome, but I think it strengthens the case that DroneShield has a genuine opportunity to become a much larger defence technology business.

The post Should I buy DroneShield shares after its big US news? appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino has positions in DroneShield. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended DroneShield. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Transurban Group (ASX: TCL) share price is in focus after announcing a $4.5 billion deal to acquire additional stakes in key Sydney toll road operators, boosting its interests in Westlink M7, NorthConnex, and WestConnex.

What did Transurban Group report?

• Agreed to acquire CPPIB’s 25% interest in NorthWestern Roads Group (Westlink M7, NorthConnex)
• Also acquiring a 10.5% stake in Sydney Transport Partners (WestConnex)
• Total cash consideration for the deal is $4.5 billion
• Post-acquisition: 75% of NWRG and 60.5% of STP owned by Transurban
• Funding via new committed debt facilities—no equity raising required
• No expected impact on FY27 free cash and distributions

What else do investors need to know?

The acquisition is set to boost Transurban’s weighted average concession life, with asset concessions running as long as 2060. There will be no change to tolls or the daily experience for NSW motorists—only the economic interest splits among partners are changing.

The deal must clear several regulatory and contractual conditions, including approval from the Australian Competition and Consumer Commission. Completion is anticipated during calendar 2027, with the final valuation set as of 31 March 2027.

What did Transurban Group management say?

Transurban CEO Michelle Jablko said:

Sydney is a core market for Transurban. WestConnex, Westlink M7 and NorthConnex provide options for Sydney motorists as they move around the city and will play an important role in supporting Sydney’s growth for decades to come. We remain disciplined with how we allocate capital in our key markets of Australia and North America and we are committed to maintaining strong investment grade credit metrics.

What’s next for Transurban Group?

Transurban expects to complete the acquisition in 2027 after securing all necessary approvals. The company has stressed its continuing commitment to strong credit metrics and investment-grade ratings, planning to refinance the acquisition debt into longer-term facilities over time.

Management highlighted that no equity raising is required and that the acquisition is expected to drive long-term growth in free cash per security, with only a minor short-term impact initially.

Transurban Group share price snapshot

Over the past 12 months, Transurban shares have declined 4%, trailing the S&P/ASX 200 Index (ASX: XJO), which has declined 1% over the same period.

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The post Transurban Group share price: $4.5bn deal for bigger Sydney road stakes appeared first on The Motley Fool Australia.

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Motley Fool contributor Laura Stewart has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Transurban Group. The Motley Fool Australia has positions in and has recommended Transurban Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.

The Lynas Rare Earths Ltd (ASX: LYC share price is in focus today after announcing a significant acquisition—Lynas will acquire all shares in Meteoric Resources Ltd (ASX: MEI) via an all-scrip deal, valued at approximately A$968 million. Meteoric shareholders are set to benefit from a substantial control premium, while Lynas boosts its resource base, including the largest ionic clay rare earth resource outside China.

What did Lynas report?

• Lynas to acquire 100% of Meteoric Resources through a scheme of arrangement.
• Meteoric shareholders will receive 0.0207 new Lynas shares per Meteoric share held.
• Implied offer value of A$0.286 per Meteoric share, a 68.4% premium to last closing price.
• The transaction is valued at A$968 million (fully diluted, 60-day VWAP basis).
• Post-acquisition, Lynas shareholders will own ~94.1% and Meteoric shareholders ~5.9% of Lynas.
• Lynas will provide a working capital facility of up to A$110 million to support Caldeira’s development and costs.

What else do investors need to know?

The acquisition will bring Meteoric’s Caldeira Project—one of the world’s largest ionic clay rare earths deposits—into the Lynas portfolio. Caldeira boasts a mineral resource of 1,631Mt @ 2,317ppm TREO and an Ore Reserve of 151Mt @ 3,524ppm TREO, with a projected 23-year mine life.

Meteoric’s board and largest shareholder have unanimously recommended the deal, provided no superior offer arises and subject to an independent expert’s positive conclusion. The transaction is still subject to regulatory and court approvals, and the Scheme Booklet is expected to be dispatched in December 2026.

What’s next for Lynas?

Lynas expects the all-scrip structure to preserve its strong balance sheet, allowing continued funding for both Caldeira’s development and other growth initiatives. The company plans to integrate Meteoric’s team and expertise, ensuring continuity for the Brazil-based project.

With this acquisition, Lynas will significantly diversify its resource base, expanding its global footprint and enhancing supply of critical minerals at a time of robust demand. Investors should watch for further announcements as the deal moves through regulatory and shareholder processes into early 2027.

Lynas share price snapshot

Over the past 12 months, Lynas shares have declined 19%, trailing the S&P/ASX 200 Index (ASX: XJO), which has declined 1% over the same period.

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The post Lynas to acquire Meteoric Resources in major rare earths deal appeared first on The Motley Fool Australia.

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Motley Fool contributor Laura Stewart has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Lynas Rare Earths Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.