Kratos Defense (KTOS) AI Stock Analysis

• Market Cap: $6.33B
• Dividend Yield: N/A
• Average Volume (3M): 2.08M
• Price to Earnings (P/E): 330.6
• Beta (1Y): 1.09
• Revenue Growth: 7.32%
• EPS Growth: N/A
• Country: US
• Employees: 4,000
• Sector: Industrials
• Sector Strength: 87
• Industry: Aerospace & Defense
• EPS (TTM): 0.12
• Shares Outstanding: 153,443,340
• 10 Day Avg. Volume: 2,563,978
• 30 Day Avg. Volume: 2,077,965
• PEG Ratio: <0.01
• Price to Book (P/B): 1.28
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -16.82
• Enterprise Value/Market Cap: 0.22
• Enterprise Value/Revenue: 0.31
• Enterprise Value/Gross Profit: 4.93
• Enterprise Value/Ebitda: 4.65
• 1Y Price Target: $38.00
• Price Target Upside: -9.00% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 7

• Rating: 74 Outperform
• Price Target: $45.00 ▲(7.76%Upside)

Kratos Defense receives a strong overall score driven by positive earnings call highlights and technical analysis trends. However, high valuation concerns and cash flow management issues slightly detract from the score. The company's potential for future growth in key sectors like hypersonics and drones is a significant strength.

Positive Factors

Contracts and Business Progress

The Apollo, Athena, and Thanatos drones are now all under contract, indicating progress in the tactical drone business.

Financial Performance

KTOS beat expectations and announced the first flight of the low-cost hypersonic Dark Fury franchise, aligning with Congress and Pentagon needs for affordable mass.

Strategic Positioning

KTOS stands out as a name with limited exposure to factors currently roiling markets, including zero exports to China and zero components supplied from China.

Negative Factors

Business Uncertainty

Uncertainty remains around the space business and pace of awards at Kratos Unmanned Systems, impacting the overall outlook.

Market Challenges

CCA evolving beyond dog fighting to work with a range of aircraft including B-21 stealth bombers and E-7’s, which broadens the use cases and market potential for KTOS drones.

Valuation Concerns

The valuation of Kratos Unmanned Systems is challenging to justify due to the lack of a significant program of record.

Kratos Defense Business Overview & Revenue Model

Company Description

Kratos Defense & Security Solutions, Inc. operates as a government contractor of the U.S. Department of Defense. The company operates through two segments, Kratos Government Solutions and Unmanned Systems. The Kratos Government Solutions segment offers microwave electronic products, space and satellite communications, training and cybersecurity/ warfare, C5ISR/ modular systems, turbine technologies, and defense and rocket support services. The Unmanned Systems segment provides unmanned aerial systems, and unmanned ground and seaborne systems. It serves national security related agencies, the department of defense, intelligence agencies, and classified agencies, as well as international government agencies and domestic and international commercial customers. Kratos Defense & Security Solutions, Inc. was incorporated in 1994 and is headquartered in San Diego, California.

How the Company Makes Money

Kratos Defense makes money through a diversified revenue model centered on government contracts, product sales, and service offerings. The company earns a substantial portion of its revenue from contracts with the U.S. Department of Defense and other government agencies, providing them with advanced technology solutions and services. The KGS segment generates income through selling communication systems, electronic products, and cybersecurity solutions. Meanwhile, the Unmanned Systems segment contributes to revenue by designing, manufacturing, and selling unmanned aerial systems (UAS) and related technologies. Additionally, Kratos leverages strategic partnerships and collaborations with other defense contractors and technology firms to enhance its product offerings and expand its market reach, further driving its revenue growth.

Kratos Defense Financial Statement Overview

Summary

Kratos Defense shows positive revenue growth and improving profitability, with a strong balance sheet characterized by low leverage and high equity. However, cash flow management remains a concern due to negative free cash flow.

Income Statement

Kratos Defense demonstrates a positive revenue growth trajectory, with TTM (Trailing-Twelve-Months) revenue increasing by 2.2% compared to the previous year. Gross profit margin remains steady at approximately 24.8%, indicating effective cost management. The net profit margin improved from 1.4% to 1.7% TTM, reflecting enhanced profitability. However, the company exhibits relatively low EBIT and EBITDA margins of 2.5% and 4.8%, respectively, suggesting room for operational efficiency improvements.

Balance Sheet

The balance sheet of Kratos Defense shows strong financial stability with a solid equity position, as indicated by an equity ratio of 69.2%. The debt-to-equity ratio stands at a low 0.08, indicating conservative leverage. Return on equity improved to 1.4% TTM, highlighting increased shareholder value. The company's robust cash and cash equivalents position further strengthens its financial resilience.

Cash Flow

Kratos Defense faces challenges in cash flow management, with free cash flow remaining negative at TTM. The operating cash flow to net income ratio is 1.02, reflecting adequate cash generation relative to reported earnings. However, free cash flow to net income is negative, indicating pressure on liquidity. The focus should be on converting earnings to positive free cash flow.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
1.16B	1.14B	1.04B	898.30M	811.50M	747.70M
	Gross Profit
287.60M	287.20M	268.60M	226.00M	225.10M	203.20M
	EBIT
28.60M	29.00M	31.10M	5.50M	27.90M	29.30M
	EBITDA
55.20M	96.40M	79.50M	26.50M	62.80M	64.40M
	Net Income Common Stockholders
19.50M	16.30M	-8.90M	-34.10M	500.00K	79.60M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
263.70M	329.30M	72.80M	81.30M	349.40M	380.80M
	Total Assets
2.00B	1.95B	1.63B	1.55B	1.59B	1.56B
	Total Debt
111.00M	282.00M	321.40M	301.80M	339.50M	348.50M
	Net Debt
-152.70M	-47.30M	248.60M	220.50M	-9.90M	-32.30M
	Total Liabilities
617.30M	597.70M	634.00M	604.00M	629.20M	622.70M
	Stockholders Equity
1.39B	1.35B	976.00M	936.30M	945.10M	925.30M
Cash Flow		Free Cash Flow
-44.40M	-8.50M	12.80M	-71.10M	-15.70M	10.70M
	Operating Cash Flow
19.80M	49.70M	65.20M	-25.70M	30.80M	46.60M
	Investing Cash Flow
-75.70M	-69.70M	-43.80M	-177.40M	-52.10M	-87.30M
	Financing Cash Flow
-19.50M	277.60M	-30.70M	-63.30M	-9.30M	247.70M

Kratos Defense Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 41.76
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KTOS, the sentiment is Positive. The current price of 41.76 is above the 20-day moving average (MA) of 38.09, above the 50-day MA of 35.09, and above the 200-day MA of 29.08, indicating a bullish trend. The MACD of 1.81 indicates Negative momentum. The RSI at 70.35 is Negative, neither overbought nor oversold. The STOCH value of 85.11 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for KTOS.

Kratos Defense Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
KTOS	74 Outperform	$6.33B	330.64	1.45%	―	7.32%	―
MOG.A	73 Outperform	$5.70B	28.14	11.61%	0.64%	4.50%	9.90%
HXL	69 Neutral	$4.53B	37.19	7.87%	1.22%	5.37%	29.15%
AVAV	68 Neutral	$8.68B	166.89	3.94%	―	5.21%	―
Sector *	66 Neutral	$4.51B	12.22	5.40%	3.63%	4.14%	-12.01%
MRCY	58 Neutral	$3.08B	―	-4.45%	―	5.66%	52.71%
SPR	37 Underperform	$4.50B	―	81.63%	―	-2.91%	-109.95%

Kratos Defense Corporate Events

Kratos Defense Holds Annual Shareholder Meeting

On May 14, 2025, Kratos Defense held its Annual Meeting with shareholders representing 133,981,220 shares. During the meeting, stockholders elected directors to serve until the next annual meeting, ratified Deloitte & Touche LLP as the independent registered public accounting firm for the fiscal year ending December 28, 2025, and approved the compensation of the company’s named executive officers.

The most recent analyst rating on (KTOS) stock is a Buy with a $30.00 price target. To see the full list of analyst forecasts on Kratos Defense stock, see the KTOS Stock Forecast page.