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Kratos Defense
(NASDAQ:KTOS)
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Rating:57Neutral
Price Target:
$54.00
▲(14.04% Upside)
Action:Reiterated
Date:08/05/26
The score is held back primarily by weak recent cash generation (negative TTM operating and free cash flow) and thin/more volatile margins, despite a strong balance sheet with low leverage. Technicals also weigh on the setup with the stock below key longer-term moving averages and a negative MACD. Offsetting these negatives, the latest earnings call was constructive with raised growth guidance and strong bookings/pipeline, but near-term cash and execution risks remain. Valuation is a further constraint given the very high P/E and no dividend support.
Positive Factors
Low Leverage / Strong Balance Sheet
Very low leverage gives Kratos durable financial flexibility to fund multi-year production ramps and capex without heavy refinancing. A strong equity base reduces default risk and supports strategic investments while absorbing temporary negative cash flows during scale-up.
Negative Factors
Negative Cash Generation
Sustained negative operating and free cash flow reduces internal funding for working capital and capex, increasing reliance on external financing or equity. Over months this can constrain execution, elevate financing costs, and force timing changes to investment plans.
Read all positive and negative factors
Positive Factors
Negative Factors
Low Leverage / Strong Balance Sheet
Very low leverage gives Kratos durable financial flexibility to fund multi-year production ramps and capex without heavy refinancing. A strong equity base reduces default risk and supports strategic investments while absorbing temporary negative cash flows during scale-up.
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
$8.74B
Dividend YieldN/A
Average Volume (3M)4.94M
Price to Earnings (P/E)269.5
Beta (1Y)1.70
Revenue Growth21.82%
EPS Growth34.38%
CountryUS
Employees4,300
SectorIndustrials
Sector Strength72
IndustryAerospace & Defense
Share Statistics
EPS (TTM)0.17
Shares Outstanding187,519,990
10 Day Avg. Volume3,818,257
30 Day Avg. Volume4,939,334
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 Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$97.00Price Target Upside104.86% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering14
EPS Forecast (FY)0.78
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:Aug 04, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Oct 29, 2026
Earnings Call Sentiment Positive
The call highlighted multiple strong operational and commercial developments: revenue and adjusted EBITDA beats, high organic growth (19.1% YoY), a robust $15B pipeline and nearly $2B of bookings over the last 12 months, rapid scaling of hypersonics (tracking $400M in 2026 and targeting $700M in 2027), major engine production plans (components ordered for 3,000 engines in 2027 and 5,000 in 2028) and expanding manufacturing capacity. These positives are tempered by near-term cash outflows driven by working capital and investment for scale-up, a $5M–$7M FY2026 EBITDA headwind from Israeli shekel strength, and reduced visibility on classified programs and supply-chain execution risk. Overall, the company is in an investment-and-scale phase with strong demand and program wins but with measurable short-term cash and FX headwinds.Positive Updates
Revenue Beat and Strong Organic Growth
Q2 revenue of $458.8M beat the company's $400M–$410M estimate; consolidated organic growth of 19.1% year-over-year. Company increased full-year 2026 organic revenue growth outlook to 19%–23% and is guiding Q3 organic growth of ~19%–25% and Q4 organic growth of ~19%–31%.
Negative Updates
Negative Operating and Free Cash Flow in Q2
Q2 cash flow used in operations was $11.0M and free cash flow used was $18.9M after $17.2M of capex; working capital build (receivables up ~$59M, inventory up ~$10M, prepaid/other up ~$14M) weighed on cash generation.
Read all updates
Q2-2026 Updates
Positive
Negative
Revenue Beat and Strong Organic Growth
Q2 revenue of $458.8M beat the company's $400M–$410M estimate; consolidated organic growth of 19.1% year-over-year. Company increased full-year 2026 organic revenue growth outlook to 19%–23% and is guiding Q3 organic growth of ~19%–25% and Q4 organic growth of ~19%–31%.
Read all positive updates
Company Guidance
Management guided Q3 revenue of $460–$480 million (organic growth ~19%–25% YoY), Q4 organic growth of ~19%–31%, and raised full‑year 2026 organic revenue growth to 19%–23% (from prior ~15%–20%), while targeting roughly a 100‑basis‑point improvement in adjusted EBITDA margin versus 2025 and expecting margins to expand in H2’26 into ’27. For context, Q2 results were $458.8 million of revenue, 19.1% consolidated organic growth, adjusted EBITDA of $38.2 million, cash flow used in operations of $11.0 million and free cash flow used of $18.9 million (capex $17.2 million; sale proceeds $9.3 million); DSOs improved to 114 days from 130. Guidance reflects a ~$5–$7 million full‑year EBITDA headwind from a stronger Israeli shekel (Q2 impact ~$2.5M; six‑month impact ~$2.8M), a revised cash‑flow profile to fund working‑capital for production (components ordered for 3,000 Spartan turbojets for 2027 and plans for 5,000 more for 2028 at an ASP of ~$50k), total 2026 investments of ~$250–$270 million, and hypersonics ramping (2025 revenue ~$200M, tracking ~$400M in 2026 and ≥$700M in 2027 with Q3 hypersonic lift of ~$20–$25M and up to ~$30M in Q4); additional metrics: last‑12‑month bookings $1.99 billion, book‑to‑bill 1.3:1, $15 billion bid pipeline, contract mix 67% fixed‑price/29% cost‑plus/4% T&M, and revenue mix ~69% U.S. federal/20% foreign/11% commercial.Kratos Defense Financial Statement Overview
Summary
Income Statement
62
Positive
Balance Sheet
80
Positive
Cash Flow
34
Negative
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.52B | 1.35B | 1.14B | 1.04B | 898.30M | 811.50M |
| Gross Profit | 334.80M | 298.30M | 287.20M | 268.60M | 226.00M | 225.10M |
| EBITDA | 118.50M | 103.80M | 93.60M | 77.50M | 26.20M | 62.80M |
| Net Income | 30.90M | 22.00M | 16.30M | -8.90M | -36.90M | -2.00M |
Balance Sheet | ||||||
| Total Assets | 4.09B | 2.47B | 1.95B | 1.63B | 1.55B | 1.59B |
| Cash, Cash Equivalents and Short-Term Investments | 1.44B | 560.60M | 329.30M | 72.80M | 81.30M | 349.40M |
| Total Debt | 193.60M | 145.80M | 282.00M | 321.40M | 301.80M | 339.50M |
| Total Liabilities | 663.00M | 470.90M | 597.70M | 634.00M | 604.00M | 629.20M |
| Stockholders Equity | 3.43B | 2.00B | 1.35B | 976.00M | 936.30M | 945.10M |
Cash Flow | ||||||
| Free Cash Flow | -128.90M | -137.40M | -8.50M | 12.80M | -71.10M | -15.70M |
| Operating Cash Flow | -39.60M | -42.10M | 49.70M | 65.20M | -25.70M | 30.80M |
| Investing Cash Flow | -420.50M | -88.30M | -69.70M | -43.80M | -177.40M | -52.10M |
| Financing Cash Flow | 1.12B | 360.70M | 277.60M | -30.70M | -63.30M | -9.30M |
Kratos Defense Technical Analysis
Positive
47.35
Price Trends
52.59
Positive
60.47
Negative
74.55
Negative
Market Momentum
-0.37
Negative
60.51
Neutral
77.38
Neutral
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 47.35 is below the 20-day moving average (MA) of 48.35, below the 50-day MA of 52.59, and below the 200-day MA of 74.55, indicating a neutral trend. The MACD of -0.37 indicates Negative momentum. The RSI at 60.51 is Neutral, neither overbought nor oversold. The STOCH value of 77.38 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 |
|---|---|---|---|---|---|---|---|
75 Outperform | $12.29B | 70.85 | 10.79% | 0.75% | 10.46% | 28.28% | |
69 Neutral | $14.66B | 16.09 | 11.93% | 0.08% | 8.80% | 19.82% | |
65 Neutral | $12.86B | 19.43 | 12.89% | 1.91% | 13.97% | 25.77% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
57 Neutral | $8.74B | 269.52 | 1.26% | ― | 21.82% | 34.38% | |
52 Neutral | $7.56B | -32.26 | -6.05% | ― | 140.89% | -448.13% |
* Industrials Sector Average
KTOS
Kratos Defense
55.34
-3.59
-6.09%
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TXT
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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.