Kratos Defense & Security (KTOS)
NASDAQ:KTOS
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Kratos Defense
(NASDAQ:KTOS)
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Rating:55Neutral
Price Target:
$56.00
▼(-21.12% Downside)
Action:Reiterated
Date:05/16/26
The score is held back primarily by negative recent operating/free cash flow and weak technical trend signals. These are partly offset by a strong balance sheet and an earnings-call outlook featuring raised growth guidance, record backlog, and margin expansion targets, while valuation remains a key risk due to the very high P/E.
Positive Factors
Record Backlog & Large Opportunity Pipeline
A $2.0B backlog and ~$14B pipeline signal durable, multi-year revenue visibility from funded and prospective programs. A book-to-bill >1 indicates new wins outpacing shipments, supporting sustained production ramp, scale economics and follow-on awards across defense, space and hypersonics.
Negative Factors
Negative Operating and Free Cash Flow
Persistent cash burn weakens earnings quality and forces reliance on equity or debt financing for CapEx, JV funding and acquisitions. Over the medium term, negative OCF/FCF constrains reinvestment, increases funding costs and elevates execution risk if contract receipts or margins disappoint.
Read all positive and negative factors
Positive Factors
Negative Factors
Record Backlog & Large Opportunity Pipeline
A $2.0B backlog and ~$14B pipeline signal durable, multi-year revenue visibility from funded and prospective programs. A book-to-bill >1 indicates new wins outpacing shipments, supporting sustained production ramp, scale economics and follow-on awards across defense, space and hypersonics.
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
$10.25B
Dividend YieldN/A
Average Volume (3M)4.10M
Price to Earnings (P/E)242.5
Beta (1Y)1.53
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. Volume4,772,316
30 Day Avg. Volume4,101,742
Financial Highlights & Ratios
PEG Ratio33.36
Price to Book (P/B)6.68
Price to Sales (P/S)9.91
P/FCF Ratio-97.12
Enterprise Value/Market Cap0.90
Enterprise Value/Revenue6.54
Enterprise Value/Gross Profit30.00
Enterprise Value/Ebitda91.19
Forecast
1Y Price Target
$103.67Price Target Upside46.03% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering13
EPS Forecast (FY)0.76
Revenue Forecast (FY)$1.73B
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 o...
How the Company Makes Money
Kratos primarily makes money by selling defense products and providing services under contracts with U.S. government agencies (notably the Department of Defense) and, in some cases, allied/international customers and prime contractors. Revenue is ...
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 | 101.50M | 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
Negative
70.99
Price Trends
68.36
Negative
83.52
Negative
80.70
Negative
Market Momentum
-4.09
Negative
42.10
Neutral
55.91
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KTOS, the sentiment is Negative. The current price of 70.99 is above the 20-day moving average (MA) of 57.76, above the 50-day MA of 68.36, and below the 200-day MA of 80.70, indicating a bearish trend. The MACD of -4.09 indicates Negative momentum. The RSI at 42.10 is Neutral, neither overbought nor oversold. The STOCH value of 55.91 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 | $15.69B | 17.63 | 12.13% | 0.09% | 9.48% | 18.21% | |
71 Outperform | $11.88B | 47.63 | 10.79% | 1.04% | 10.46% | 23.24% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
61 Neutral | $12.51B | 25.05 | 12.05% | 1.53% | 12.08% | 10.89% | |
55 Neutral | $10.25B | 242.47 | 1.26% | ― | 21.82% | 34.38% | |
50 Neutral | $8.14B | -21.68 | -6.41% | ― | 116.86% | -467.25% |
* Industrials Sector Average
KTOS
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56.18
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56.01%
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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...
Business Operations and StrategyExecutive/Board Changes
Kratos Defense Adds Veteran Executive to Board, Audit Committee
Positive
Mar 25, 2026
On March 23, 2026, Kratos Defense Security Solutions appointed veteran aerospace and defense executive David King to its Board of Directors and to the Board’s Audit Committee, following a recommendation from the Nominating and Corporate Gov...
Delistings and Listing ChangesM&A Transactions
Kratos Defense Completes Cash Acquisition of Orbit Technologies
Positive
Mar 6, 2026
Kratos Defense Security Solutions completed the acquisition of Israeli firm Orbit Technologies Ltd. on March 2, 2026, following a merger agreement initially signed on November 4, 2025. Orbit, previously listed on the Tel Aviv Stock Exchange, now ...
Business Operations and StrategyM&A TransactionsPrivate Placements and Financing
Kratos Defense Completes Public Equity Offering to Expand
Positive
Mar 2, 2026
On February 26, 2026, Kratos Defense Security Solutions entered an underwriting agreement to sell 14,285,714 common shares in a firm-commitment public offering, with underwriters granted a 30-day option for an additional 2,142,857 shares. The opt...
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.