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Kratos Defense
(NASDAQ:KTOS)
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Rating:60Neutral
Price Target:
$58.00
▼(-18.30% Downside)
Action:Reiterated
Date:05/29/26
KTOS scores around the middle primarily due to a solid, low-leverage balance sheet and strong earnings-call indicators (backlog growth, guidance, and EBITDA outperformance) being offset by weak recent cash generation and a highly demanding valuation (very high P/E). Technicals are mixed, with negative MACD and the stock below key longer-term moving averages limiting near-term confidence.
Positive Factors
Conservative Balance Sheet
Very low debt-to-equity (~0.05) and materially grown equity provide structural financial flexibility. This reduces refinancing and interest-rate risk, supports higher-capacity bidding on government programs, and allows the company to fund strategic investments or weather timing gaps in awards without immediate solvency pressure.
Negative Factors
Negative Cash Generation
Recent swings to negative operating and deeply negative free cash flow signal persistent funding needs during a growth phase. Over 2–6 months this raises execution risk: the company may rely on external financing, equity issuance, or JV funding to support CapEx and working capital, diluting optionality and heightening liquidity sensitivity.
Read all positive and negative factors
Positive Factors
Negative Factors
Conservative Balance Sheet
Very low debt-to-equity (~0.05) and materially grown equity provide structural financial flexibility. This reduces refinancing and interest-rate risk, supports higher-capacity bidding on government programs, and allows the company to fund strategic investments or weather timing gaps in awards without immediate solvency pressure.
Read all positive factors
Kratos Defense Key Performance Indicators (KPIs)
Any
Revenue by Segment
Breaks down sales by Kratos’ operating segments to show which products or business lines drive growth and where revenue is concentrated. Useful for spotting high-growth areas, customer or program concentration risk, and sensitivity to shifts in defense spending or contract awards.
Breaks down sales by Kratos’ operating segments to show which products or business lines drive growth and where revenue is concentrated. Useful for spotting high-growth areas, customer or program concentration risk, and sensitivity to shifts in defense spending or contract awards.
Data provided by:
The Fly
The FlyKratos Defense (KTOS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$10.38B
Dividend YieldN/A
Average Volume (3M)4.80M
Price to Earnings (P/E)320.1
Beta (1Y)1.69
Revenue Growth21.82%
EPS Growth34.38%
CountryUS
Employees4,000
SectorIndustrials
Sector Strength72
IndustryAerospace & Defense
Share Statistics
EPS (TTM)0.17
Shares Outstanding187,519,990
10 Day Avg. Volume3,871,871
30 Day Avg. Volume4,802,992
Financial Highlights & Ratios
PEG Ratio32.78
Price to Book (P/B)6.68
Price to Sales (P/S)9.91
P/FCF Ratio-97.12
Enterprise Value/Market Cap0.89
Enterprise Value/Revenue6.54
Enterprise Value/Gross Profit29.99
Enterprise Value/Ebitda84.88
Forecast
1Y Price Target
$93.27Price Target Upside31.39% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering12
EPS Forecast (FY)0.76
Revenue Forecast (FY)$1.74B
Kratos Defense Business Overview & Revenue Model
Company Description
Kratos Defense & Security Solutions, Inc. primarily functions as a contractor for the United States Department of Defense. Its business operations are organized into two distinct divisions: Kratos Government Solutions and Unmanned Systems. The Kra...
How the Company Makes Money
Kratos makes money primarily by selling products and services to government customers through defense contracting mechanisms. Key revenue streams include: (1) Unmanned Systems: revenue from designing, manufacturing, and delivering unmanned aerial ...
Kratos Defense Earnings Call Summary
Earnings Call Date:May 06, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Jul 30, 2026
Earnings Call Sentiment Positive
The call conveyed strong operational momentum and multiple high‑value contract wins (record backlog, expanded $14B pipeline, revenue and EBITDA beats, significant hypersonics and satellite awards) and a clear path to margin expansion. These positives were tempered by near‑term cash outflows, working capital pressures (DSO up to 130 days), supply‑chain and hiring constraints, and an expected sequential Q2 step‑down in margins and revenue mix. On balance, management presented substantial growth opportunities and articulated financial targets and investments to capture them, while noting execution and timing risks tied to government funding and talent/supply availability.Positive Updates
Revenue Beat and Organic Growth
Q1 2026 revenue of $371.0M beat the prior guidance range of $335M–$345M; excluding the Orbit acquisition revenue was $357.7M. Consolidated organic revenue growth was 15.8% year-over-year.
Negative Updates
Operating Cash Flow and Free Cash Flow Use
Q1 operating cash flow used $27.4M and free cash flow used $43.1M (after $19.9M of CapEx and $4.2M proceeds from asset sales), reflecting investments and working capital build for growth.
Read all updates
Q1-2026 Updates
Positive
Negative
Revenue Beat and Organic Growth
Q1 2026 revenue of $371.0M beat the prior guidance range of $335M–$345M; excluding the Orbit acquisition revenue was $357.7M. Consolidated organic revenue growth was 15.8% year-over-year.
Read all positive updates
Company Guidance
Kratos updated Q2 and full‑year 2026 guidance and provided several key metrics: Q2 revenue guidance of $400–$410M (organic growth ~4–7% vs Q2’25) and updated FY‑26 revenue guidance of $1.70–$1.76B (organic growth 15–19%); Q1 results were $371M revenue ($357.7M excl. Orbit) with consolidated organic revenue growth of 15.8% and adjusted EBITDA of $38.7M (vs. prior estimate $25–$30M); Q1 operating cash used $27.4M and free cash flow used $43.1M after $19.9M CapEx and $4.2M proceeds; management reiterated year‑over‑year EBITDA margin improvement targets of +100 basis points for ’26 vs ’25 and for ’27 vs ’26; backlog was a record $2.0B with an opportunity pipeline >$14B, company book‑to‑bill 1.6:1 (satellite 3:1; KGS 1.8:1), DSOs 130 days, contract mix 73% fixed‑price/23% cost‑plus/4% T&M, customer mix ~69% U.S. federal/21% foreign/10% commercial, ~ $50M Prometheus JV funding planned in 2026, elevated 2026 CapEx (company commentary around ~$160M) to ramp facilities, and program targets such as ~40 Valkyrie units/year by early 2028, hypersonics revenue of $400M in ’26 and ~$700M in ’27, and plans to produce several thousand small jet engines in 2027.Kratos Defense Financial Statement Overview
Summary
Income Statement
66
Positive
Balance Sheet
82
Very Positive
Cash Flow
34
Negative
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.42B | 1.35B | 1.14B | 1.04B | 898.30M | 811.50M |
| Gross Profit | 308.50M | 298.30M | 287.20M | 268.60M | 226.00M | 225.10M |
| EBITDA | 109.00M | 103.80M | 93.60M | 77.50M | 26.20M | 62.80M |
| Net Income | 29.40M | 22.00M | 16.30M | -8.90M | -36.90M | -2.00M |
Balance Sheet | ||||||
| Total Assets | 4.04B | 2.47B | 1.95B | 1.63B | 1.55B | 1.59B |
| Cash, Cash Equivalents and Short-Term Investments | 1.46B | 560.60M | 329.30M | 72.80M | 81.30M | 349.40M |
| Total Debt | 185.40M | 179.60M | 282.00M | 321.40M | 301.80M | 339.50M |
| Total Liabilities | 632.70M | 470.90M | 597.70M | 634.00M | 604.00M | 629.20M |
| Stockholders Equity | 3.41B | 2.00B | 1.35B | 976.00M | 936.30M | 945.10M |
Cash Flow | ||||||
| Free Cash Flow | -134.00M | -137.40M | -8.50M | 12.80M | -71.10M | -15.70M |
| Operating Cash Flow | -41.40M | -42.10M | 49.70M | 65.20M | -25.70M | 30.80M |
| Investing Cash Flow | -430.80M | -88.30M | -69.70M | -43.80M | -177.40M | -52.10M |
| Financing Cash Flow | 1.67B | 360.70M | 277.60M | -30.70M | -63.30M | -9.30M |
Kratos Defense Technical Analysis
Neutral
70.99
Price Trends
57.17
Negative
70.26
Negative
79.28
Negative
Market Momentum
-2.35
Negative
51.61
Neutral
56.37
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KTOS, the sentiment is Neutral. The current price of 70.99 is above the 20-day moving average (MA) of 53.97, above the 50-day MA of 57.17, and below the 200-day MA of 79.28, indicating a neutral trend. The MACD of -2.35 indicates Negative momentum. The RSI at 51.61 is Neutral, neither overbought nor oversold. The STOCH value of 56.37 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for KTOS.
Kratos Defense Risk Analysis
Kratos Defense disclosed 67 risk factors in its most recent earnings report. Kratos Defense reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Kratos Defense Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $16.08B | 17.65 | 12.13% | 0.09% | 9.48% | 18.21% | |
71 Outperform | $11.66B | 40.48 | 10.79% | 1.04% | 10.46% | 23.24% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
61 Neutral | $11.49B | 18.94 | 12.05% | 1.53% | 12.08% | 10.89% | |
60 Neutral | $10.38B | 320.13 | 1.26% | ― | 21.82% | 34.38% | |
55 Neutral | $9.66B | -41.23 | -6.41% | ― | 140.89% | -448.13% |
* Industrials Sector Average
KTOS
Kratos Defense
55.35
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23.60%
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Kratos Defense Corporate Events
Business Operations and StrategyShareholder Meetings
Kratos Defense Shareholders Approve Governance and Capital Changes
Positive
May 15, 2026
At its annual meeting on May 12, 2026, Kratos Defense shareholders re-elected all nominated directors and ratified Deloitte Touche LLP as the independent auditor for the fiscal year ending December 27, 2026. Holders of 163,944,621 shares were rep...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.