Kratos Defense (KTOS) AI Stock Analysis

• Market Cap: $11.67B
• Dividend Yield: N/A
• Average Volume (3M): 4.63M
• Price to Earnings (P/E): 737.7
• Beta (1Y): 1.24
• Revenue Growth: 7.76%
• EPS Growth: 40.33%
• Country: US
• Employees: 4,000
• Sector: Industrials
• Sector Strength: 83
• Industry: Aerospace & Defense
• EPS (TTM): 0.11
• Shares Outstanding: 168,794,500
• 10 Day Avg. Volume: 4,347,254
• 30 Day Avg. Volume: 4,633,184
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 0.58
• Enterprise Value/Revenue: 5.53
• Enterprise Value/Gross Profit: 23.43
• Enterprise Value/Ebitda: 85.49
• 1Y Price Target: $70.14
• Price Target Upside: 1.48% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 15

• Rating: 63 Neutral
• Price Target: $73.00 ▲(5.61% Upside)

Kratos Defense's overall stock score is driven by strong earnings call insights and a positive corporate event, indicating future growth potential. However, financial performance challenges, particularly in profitability and cash flow, along with a high P/E ratio, weigh down the score. The lack of technical indicators further limits the stock's attractiveness.

Positive Factors

Hypersonics

The MACH-TB 2.0 contract is the largest in company history, with potential for increased funding, highlighting KTOS's strength in hypersonics.

Partnership Opportunities

The Valkyrie program is gaining momentum, with Airbus partnering with KTOS to deliver a European mission-focused Valkyrie to the German Luftwaffe.

Unmanned Systems

KTOS has been downselected for the Marine Corps' MUX TACAIR program, indicating significant growth potential in Unmanned Systems.

Negative Factors

Earnings Season

Bookings for the quarter were 0.7x, indicating a trend of selling the news this earnings season.

Stock Valuation

KTOS is trading at a premium to the trailing average NTM multiple, reflecting unprecedented opportunities KTOS is currently executing against.

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 generates revenue primarily through government contracts, selling its products and services to various branches of the U.S. Department of Defense and other government agencies. Key revenue streams include the development and production of unmanned aerial systems, satellite communication technologies, and advanced cybersecurity solutions. The company also engages in research and development projects funded by government contracts, which contribute significantly to its earnings. Additionally, Kratos has established strategic partnerships with other defense contractors and technology firms, enhancing its capabilities and expanding its market reach, further supporting its financial performance.

Kratos Defense Financial Statement Overview

Summary

Kratos Defense shows positive revenue growth and improving profitability, supported by a strong balance sheet with low leverage. However, challenges in cash flow management, evidenced by negative free cash flow, remain a concern.

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	1.21B	1.14B	1.04B	898.30M	811.50M	747.70M
Gross Profit	286.40M	287.20M	268.60M	226.00M	225.10M	203.20M
EBITDA	78.50M	96.40M	79.50M	26.50M	62.80M	64.40M
Net Income	14.50M	16.30M	-8.90M	-36.90M	-2.00M	79.60M
Balance Sheet
Total Assets	2.59B	1.95B	1.63B	1.55B	1.59B	1.56B
Cash, Cash Equivalents and Short-Term Investments	783.60M	329.30M	72.80M	81.30M	349.40M	380.80M
Total Debt	109.50M	282.00M	321.40M	301.80M	339.50M	348.50M
Total Liabilities	625.70M	597.70M	634.00M	604.00M	629.20M	622.70M
Stockholders Equity	1.96B	1.35B	976.00M	936.30M	945.10M	925.30M
Cash Flow
Free Cash Flow	-61.20M	-8.50M	12.80M	-71.10M	-15.70M	10.70M
Operating Cash Flow	10.80M	49.70M	65.20M	-25.70M	30.80M	46.60M
Investing Cash Flow	-72.00M	-69.70M	-43.80M	-177.40M	-52.10M	-87.30M
Financing Cash Flow	534.90M	277.60M	-30.70M	-63.30M	-9.30M	247.70M

Kratos Defense Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 69.12
• 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 69.12 is above the 20-day moving average (MA) of 60.68, above the 50-day MA of 50.97, and above the 200-day MA of 35.26, indicating a bullish trend. The MACD of 4.74 indicates Negative momentum. The RSI at 76.77 is Negative, neither overbought nor oversold. The STOCH value of 87.11 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
MOG.A	78 Outperform	$6.19B	29.52	11.32%	0.60%	4.77%	4.50%
HXL	69 Neutral	$4.93B	57.53	5.63%	1.06%	1.92%	-15.47%
AVAV	68 Neutral	$12.36B	165.10	5.10%	―	14.50%	-29.76%
Sector *	63 Neutral	$10.80B	16.55	6.58%	2.06%	2.37%	-15.86%
KTOS	63 Neutral	$11.67B	737.66	0.88%	―	7.76%	40.33%
MRCY	59 Neutral	$4.08B	―	-2.57%	―	9.19%	72.88%
SPR	51 Neutral	$4.80B	―	81.63%	―	-2.60%	-94.76%

Kratos Defense Corporate Events

Kratos Defense Completes Public Offering of Shares

On June 25, 2025, Kratos Defense & Security Solutions announced an underwritten public offering of 12,987,013 shares of its common stock, with an option for underwriters to purchase an additional 1,948,052 shares, which was fully exercised. The offering, completed on June 27, 2025, was priced at $38.50 per share, and Kratos plans to use the proceeds for investments in national security priorities, acquisitions, and general corporate purposes. This move is expected to enhance Kratos’ ability to execute on large-scale national security programs and strengthen its market position.

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.

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.