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Kratos Defense (KTOS) AI Stock Analysis
Kratos Defense
(NASDAQ:KTOS)
KTOS scores as a mixed setup: strong demand/backlog and upbeat multi-year growth guidance from the earnings call support the outlook, but the overall score is held back by weak cash generation (negative operating and free cash flow), very thin margins, and a bearish technical trend. The high P/E further raises the bar for execution on margin expansion and cash-flow improvement.
Kratos Defense Key Performance Indicators (KPIs)
Revenue by SegmentBreaks 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.
Government Solutions is the clear scale engine—secularly higher and accelerating as large Space/hypersonics awards and a record $2B backlog drive outsized, steadier revenue — while Unmanned Systems is the higher-growth but lumpy second vector, fueled by Valkyrie ramp plans. Management’s guidance and pipeline validate continued top‑line upside, but hitting hypersonics and Valkyrie volume targets requires heavy capex, hires and supply‑chain execution; elevated DSO and near‑term cash use create real timing risk and a Q2 margin step‑down investors should price in.
The FlyKratos Defense (KTOS) vs. SPDR S&P 500 ETF (SPY)
- Market Cap
- $6.59B
- Dividend Yield
- ―
- Average Volume (3M)
- 4.16M
- Price to Earnings (P/E)
- 286.5
- Beta (1Y)
- 1.91
- Revenue Growth
- 28.17%
- EPS Growth
- -0.16%
- Country
- US
- Employees
- 4,300
- Sector
- Industrials
- Sector Strength
- 63
- Industry
- Aerospace & Defense
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 Kratos...
How the Company Makes Money
Kratos primarily makes money by selling defense and aerospace products and providing related engineering and mission support services, largely to U.S. government customers (including the Department of Defense and associated agencies) and, to a lesser...
Kratos Defense Earnings Call Summary
The call was strongly positive. Highlights significantly outweighed the lowlights, supported by 35.7% consolidated revenue growth, 23.2% organic growth, record $1.04 billion bookings, a 2.2:1 book-to-bill ratio, record $2.6 billion backlog, an adjusted EBITDA beat, strong program wins, and an 18%-22% initial 2027 revenue-growth outlook. The principal challenges were funding and political uncertainty, supply-chain and labor constraints, negative near-term cash flow, higher working-capital needs, foreign-exchange pressure, and a cost-plus mix that limits margin expansion.
Q3-2026 Updates
Positive Updates
Negative Updates
Company Guidance
Fourth quarter 2026 revenue guidance is $480 million-$510 million, reflecting estimated organic revenue growth of approximately 18%-26% as compared to the fourth quarter of 2025; tightened full year 2026 revenue guidance is $1.78 billion-$1.810 billion. Initial 2027 guidance is revenue of $2.1 billion-$2.2 billion and adjusted EBITDA of $230 million-$240 million, reflecting revenue growth of approximately 18%-22% over the current increased 2026 financial revenue guidance range and estimated organic revenue growth of 18%-22% from the estimated fiscal 2026 revenue range, with Q1 2027 expected to be the lightest revenue and EBITDA fiscal quarter and the third and fourth quarter of fiscal 2027 expected to reflect substantially greater revenue and adjusted EBITDA. Kratos expects approximately $700 million in hypersonic and rocket system revenue in 2027, to produce 3,000 turbojet engines in 2027 and deliver approximately 1,500 in 2027, predominantly in Q3 and Q4, with the remaining 1,500 delivered in 2028, and to place orders for a second production lot of approximately 5,000 more engines; Firejet manufacturing capacity is expected to approximately triple by the end of 2027, and the company currently expects to be cash flow positive by 2029.
Kratos Defense Financial Statement Overview
Summary
Fundamentals are mixed: revenue growth is solid and the balance sheet is conservatively levered (very low debt-to-equity), but profitability remains very thin (TTM net margin ~1.3%, EBIT ~2.0%) and cash generation is the key weakness with negative TTM operating cash flow (-$31.5M) and deeply negative free cash flow (-$123M).
Income Statement
62PositiveBalance Sheet
80PositiveCash Flow
34Negative| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.65B | 1.35B | 1.14B | 1.04B | 898.30M | 811.50M |
| Gross Profit | 363.70M | 298.30M | 287.20M | 268.60M | 226.00M | 225.10M |
| EBITDA | 121.50M | 103.80M | 93.60M | 77.50M | 26.20M | 62.80M |
| Net Income | 22.00M | 22.00M | 16.30M | -8.90M | -36.90M | -2.00M |
Balance Sheet | ||||||
| Total Assets | 4.19B | 2.47B | 1.95B | 1.63B | 1.55B | 1.59B |
| Cash, Cash Equivalents and Short-Term Investments | 1.40B | 560.60M | 329.30M | 72.80M | 81.30M | 349.40M |
| Total Debt | 246.00M | 145.80M | 282.00M | 321.40M | 301.80M | 339.50M |
| Total Liabilities | 735.90M | 470.90M | 597.70M | 634.00M | 604.00M | 629.20M |
| Stockholders Equity | 3.45B | 2.00B | 1.35B | 976.00M | 936.30M | 945.10M |
Cash Flow | ||||||
| Free Cash Flow | -123.00M | -137.40M | -8.50M | 12.80M | -71.10M | -15.70M |
| Operating Cash Flow | -31.50M | -42.10M | 49.70M | 65.20M | -25.70M | 30.80M |
| Investing Cash Flow | -425.90M | -88.30M | -69.70M | -43.80M | -177.40M | -52.10M |
| Financing Cash Flow | 1.30B | 360.70M | 277.60M | -30.70M | -63.30M | -9.30M |
Kratos Defense Technical Analysis
Price Trends
Market Momentum
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 35.10 is below the 20-day moving average (MA) of 39.48, below the 50-day MA of 43.48, and below the 200-day MA of 62.01, indicating a bearish trend. The MACD of -1.96 indicates Positive momentum. The RSI at 35.06 is Neutral, neither overbought nor oversold. The STOCH value of 12.92 is Positive, 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.
Latest Risks Added
0 New RisksKratos Defense Peers Comparison
Overall Rating
LMT79Outperform
NOC77Outperform
LHX75Outperform- KTOS56Neutral
AVAV50Neutral
RKLB48Neutral
Financial Indicators
| Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
| LMT | 79Outperform | $133.10B | 20.06 | 78.85% | 2.43% | 7.86% | 57.22% |
| NOC | 77Outperform | $74.62B | 16.53 | 25.70% | 1.82% | 6.51% | 14.02% |
| LHX | 75Outperform | $48.06B | 24.11 | 10.17% | 1.91% | 7.33% | 15.31% |
| Sector * | 63Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% |
| KTOS | 56Neutral | $6.27B | 286.53 | 0.72% | ― | 28.17% | -0.16% |
| AVAV | 50Neutral | $5.19B | -19.37 | -6.64% | ― | 84.44% | -541.91% |
| RKLB | 48Neutral | $27.52B | -191.66 | -7.56% | ― | 52.53% | 38.89% |
* Industrials Sector Average
Performance Comparison
| Show on chart | Ticker | Company Name | Price | Change | % Change |
|---|---|---|---|---|---|
| KTOS | Kratos Defense & Security | 35.10 | -44.08 | -55.67% | |
| AVAV | AeroVironment, Inc. | 112.76 | -221.11 | -66.23% | |
| LHX | L3harris Technologies | 259.89 | -32.26 | -11.04% | |
| LMT | Lockheed Martin | 567.08 | 126.37 | 28.67% | |
| NOC | Northrop Grumman Corp. | 525.01 | -28.94 | -5.22% | |
| RKLB | Rocket Lab Usa, Inc. | 53.07 | 1.17 | 2.25% |
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.
Date of analysis: Nov 06, 2026