Kratos Defense (KTOS) AI Stock Analysis

• Market Cap: $12.73B
• Dividend Yield: N/A
• Average Volume (3M): 2.18M
• Price to Earnings (P/E): 663.9
• Beta (1Y): 1.44
• 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: 2,113,757
• 30 Day Avg. Volume: 2,176,773
• 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: 1.14
• Enterprise Value/Revenue: 11.28
• Enterprise Value/Gross Profit: 49.22
• Enterprise Value/Ebitda: 158.15
• 1Y Price Target: $98.00
• Price Target Upside: 20.20% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 14
• EPS Forecast (FY): 0.54
• Revenue Forecast (FY): $1.33B

• Rating: 60 Neutral
• Price Target: $81.00 ▼(-0.65% Downside)

Kratos Defense's overall stock score is driven by strong future growth prospects from strategic acquisitions and program wins, as highlighted in the earnings call and corporate events. However, the high P/E ratio and cash flow challenges present significant risks. The technical analysis suggests caution due to potential bearish momentum.

Positive Factors

Strategic Acquisitions

The acquisition of Orbit Technologies enhances Kratos' market presence in satellite communications, providing new growth opportunities and strengthening its position in the defense sector.

Revenue Growth Forecast

The upward revision of revenue forecasts indicates strong market demand and effective business strategies, positioning Kratos for sustained growth.

Facility Expansion

The new facility supports increased production capacity for Spartan engines, aligning with Kratos' growth in military-grade propulsion systems and enhancing its competitive edge.

Negative Factors

Cash Flow Challenges

Persistent cash flow challenges may limit Kratos' ability to invest in growth opportunities and could strain financial flexibility, impacting long-term stability.

Increased Material Costs

Rising material costs can pressure margins and profitability, potentially affecting Kratos' cost management and pricing strategies in the long term.

Low Profit Margins

Low profit margins indicate challenges in achieving operational efficiency and profitability, which may hinder Kratos' ability to generate sustainable returns for shareholders.

Kratos Defense Business Overview & Revenue Model

Company Description

Kratos Defense & Security Solutions, Inc. (KTOS) is a technology company focused on providing innovative solutions for national security and defense sectors. The company operates through various segments, including Defense and Security, Unmanned Systems, and Tactical Communications. Kratos develops advanced systems and technologies such as drone systems, satellite communications, and cybersecurity solutions, catering primarily to government and military clients.

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: 81.53
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: 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 81.53 is above the 20-day moving average (MA) of 75.17, above the 50-day MA of 79.66, and above the 200-day MA of 58.04, indicating a bullish trend. The MACD of -0.60 indicates Negative momentum. The RSI at 58.69 is Neutral, neither overbought nor oversold. The STOCH value of 58.74 is Neutral, 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
TXT	75 Outperform	$15.77B	19.68	11.46%	0.09%	1.83%	-0.73%
ERJ	73 Outperform	―	―	12.21%	0.08%	22.29%	51.90%
DRS	70 Outperform	$8.95B	34.12	10.35%	1.04%	12.27%	33.16%
HII	69 Neutral	$13.21B	23.26	12.39%	1.54%	2.60%	-18.22%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
KTOS	60 Neutral	$12.73B	663.93	1.20%	―	14.00%	23.78%
AVAV	52 Neutral	$12.13B	―	-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.