Kratos Defense (KTOS) AI Stock Analysis

• Market Cap: $20.51B
• Dividend Yield: N/A
• Average Volume (3M): 2.63M
• Price to Earnings (P/E): 989.4
• Beta (1Y): 1.50
• Revenue Growth: 14.00%
• EPS Growth: 23.78%
• Country: US
• Employees: 4,000
• Sector: Industrials
• Sector Strength: 72
• Industry: Aerospace & Defense
• EPS (TTM): 0.14
• Shares Outstanding: 168,840,710
• 10 Day Avg. Volume: 4,035,731
• 30 Day Avg. Volume: 2,626,138
• PEG Ratio: -0.93
• Price to Book (P/B): 2.92
• Price to Sales (P/S): 3.48
• P/FCF Ratio: -464.88
• Enterprise Value/Market Cap: 0.71
• Enterprise Value/Revenue: 11.28
• Enterprise Value/Gross Profit: 49.22
• Enterprise Value/Ebitda: 158.15
• 1Y Price Target: $110.38
• Price Target Upside: -9.15% Downside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 13
• EPS Forecast (FY): 0.78
• Revenue Forecast (FY): $1.59B

• Rating: 63 Neutral
• Price Target: $111.00 ▼(-8.64% Downside)

The score is anchored by mixed financial fundamentals—strong balance sheet and growth, but weak profitability and negative cash flow—partly offset by very constructive guidance and execution versus Q3 targets. Technicals are strong but look overbought, while the extremely high P/E meaningfully drags the overall score.

Positive Factors

Balance Sheet Strength

Kratos' very low debt-to-equity indicates a conservative capital structure and low financial leverage. That durability reduces refinancing risk, gives flexibility to invest in production and R&D for multiyear defense programs, and supports bidding on large government contracts.

Upgraded Multi-Year Revenue Guidance

Management's materially higher multi-year organic growth targets and guided EBITDA expansion reflect durable program wins and backlog visibility. Sustained double-digit growth with expected operating-leverage gains supports mid-term revenue runway and the case for reinvestment into scale.

Strategic Acquisition & Partnerships

The Orbit acquisition and partnerships (e.g., Northrop Grumman, Airbus integrations) broaden Kratos' satellite comms and unmanned systems footprint. These moves expand addressable markets, add complementary tech, and create cross-sell and international opportunities that should sustain growth beyond one-off contracts.

Negative Factors

Negative Operating & Free Cash Flow

Persistent negative operating and free cash flow shows core cash generation weakness despite revenue growth. Over the medium term this limits internal funding for working capital, inventory buildup and capex for production scale, increasing reliance on external financing or dilutive capital actions.

Thin Profitability and Margin Pressure

Very low net margin and declining gross/EBITDA margins point to structural profitability constraints. With production and fixed-price programs, limited margins reduce the firm's ability to absorb cost inflation, undermining free cash generation and making earnings highly sensitive to contract mix.

Material Cost Pressure on Fixed-Price Contracts

Rising subcontractor and material costs on multi-year fixed-price programs create a structural earnings risk: margins can be permanently compressed unless contracts are repriced or efficiencies found. For a company scaling production, such input-cost exposure can materially erode returns over quarters.

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 through multiple streams, primarily by providing systems and services under government contracts. The company earns money from the sale of unmanned systems and drones, which are utilized for surveillance and reconnaissance missions. Additionally, Kratos offers tactical communications equipment and services, which contribute significantly to its earnings. The company also engages in research and development initiatives funded by government contracts, allowing it to create cutting-edge technologies. Strategic partnerships with defense agencies and collaborations with other defense contractors further enhance its revenue potential, as they lead to joint projects and shared resources.

Kratos Defense Financial Statement Overview

Summary

Kratos Defense shows moderate revenue growth but struggles with profitability and cash flow management. The company maintains a strong balance sheet with low leverage, providing financial stability. However, improving operational efficiency and cash flow generation is crucial.

Income Statement

Kratos Defense shows moderate revenue growth with a 4.43% increase in TTM, indicating a positive trajectory. However, profitability margins such as the net profit margin (1.20%) and EBIT margin (1.99%) are relatively low, suggesting challenges in cost management or pricing power. The gross profit margin has slightly decreased over time, indicating potential pressure on production costs or pricing strategies.

Balance Sheet

The company maintains a strong balance sheet with a low debt-to-equity ratio of 0.056, indicating conservative leverage and financial stability. The equity ratio is healthy, reflecting a strong capital base. However, the return on equity (ROE) is low at 0.96%, suggesting limited profitability relative to shareholder equity.

Cash Flow

Kratos Defense faces challenges in cash flow management, with negative free cash flow and a high free cash flow to net income ratio of -5.67, indicating cash flow issues relative to earnings. The operating cash flow to net income ratio is low at 0.033, suggesting inefficiencies in converting earnings into cash.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.28B	1.14B	1.04B	898.30M	811.50M	747.70M
Gross Profit	294.30M	287.20M	268.60M	226.00M	225.10M	203.20M
EBITDA	91.60M	93.60M	77.50M	26.20M	62.80M	64.40M
Net Income	20.00M	16.30M	-8.90M	-36.90M	-2.00M	79.60M
Balance Sheet
Total Assets	2.42B	1.95B	1.63B	1.55B	1.59B	1.56B
Cash, Cash Equivalents and Short-Term Investments	565.90M	329.30M	72.80M	81.30M	349.40M	380.80M
Total Debt	134.30M	282.00M	321.40M	301.80M	339.50M	348.50M
Total Liabilities	441.80M	597.70M	634.00M	604.00M	629.20M	622.70M
Stockholders Equity	1.98B	1.35B	976.00M	936.30M	945.10M	925.30M
Cash Flow
Free Cash Flow	-93.30M	-8.50M	12.80M	-71.10M	-15.70M	10.70M
Operating Cash Flow	-8.60M	49.70M	65.20M	-25.70M	30.80M	46.60M
Investing Cash Flow	-84.70M	-69.70M	-43.80M	-177.40M	-52.10M	-87.30M
Financing Cash Flow	357.20M	277.60M	-30.70M	-63.30M	-9.30M	247.70M

Kratos Defense Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 121.50
• 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 121.5 is above the 20-day moving average (MA) of 91.07, above the 50-day MA of 81.38, and above the 200-day MA of 63.19, indicating a bullish trend. The MACD of 11.59 indicates Negative momentum. The RSI at 85.15 is Negative, neither overbought nor oversold. The STOCH value of 95.72 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
DRS	76 Outperform	$11.02B	42.01	10.35%	1.04%	12.27%	33.16%
TXT	75 Outperform	$16.60B	20.72	11.46%	0.09%	1.83%	-0.73%
HII	69 Neutral	$16.30B	28.70	12.39%	1.53%	2.60%	-18.22%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
KTOS	63 Neutral	$20.51B	989.41	1.20%	―	14.00%	23.78%
AVAV	62 Neutral	$19.06B	-304.47	-2.64%	―	79.89%	-171.81%

Kratos Defense Corporate Events

Kratos Defense Acquires Orbit Technologies for $356.3M

On November 4, 2025, Kratos Defense & Security Solutions announced a definitive agreement to acquire Orbit Technologies Ltd for $356.3 million. Orbit, a leading provider of satellite-based communication systems, will become a wholly owned subsidiary of Kratos, enhancing its position in the global unmanned systems and satellite communications market. The acquisition is expected to be immediately accretive to Kratos’ financial metrics and will integrate Orbit’s operations into Kratos’ Microwave Electronics Division. This strategic move is anticipated to create new growth opportunities and strengthen Kratos’ market presence, particularly in the U.S. defense sector.

The most recent analyst rating on (KTOS) stock is a Buy with a $95.00 price target. To see the full list of analyst forecasts on Kratos Defense stock, see the KTOS Stock Forecast page.