Kratos Defense (KTOS) AI Stock Analysis

• Market Cap: $14.90B
• Dividend Yield: N/A
• Average Volume (3M): 5.38M
• Price to Earnings (P/E): 947.4
• Beta (1Y): 1.23
• Revenue Growth: 7.76%
• EPS Growth: 40.33%
• Country: US
• Employees: 4,000
• Sector: Industrials
• Sector Strength: 72
• Industry: Aerospace & Defense
• EPS (TTM): 0.11
• Shares Outstanding: 168,794,500
• 10 Day Avg. Volume: 3,714,815
• 30 Day Avg. Volume: 5,380,668
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 0.45
• Enterprise Value/Revenue: 5.53
• Enterprise Value/Gross Profit: 23.43
• Enterprise Value/Ebitda: 85.49
• 1Y Price Target: $92.54
• Price Target Upside: 1.46% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 13

• Rating: 64 Neutral
• Price Target: $97.00 ▲(6.35% Upside)

Kratos Defense's overall stock score is driven by strong earnings call results and positive technical indicators. However, the high P/E ratio and cash flow challenges weigh down the score. The company's strong balance sheet and strategic positioning in growth areas like tactical drones and hypersonics provide a positive long-term outlook.

Positive Factors

Strategic Positioning

Recognition of the Valkyrie drone as a program of record enhances Kratos' market position in tactical drones, ensuring sustained demand and strategic relevance in defense operations.

New Product Development

The introduction of the Ragnarok LCCM system showcases Kratos' innovation in tactical strike capabilities, potentially expanding its market share and reinforcing its competitive edge in defense technology.

Revenue Growth

Strong organic revenue growth and a robust backlog indicate Kratos' ability to secure and execute large contracts, supporting long-term revenue expansion and market presence.

Negative Factors

Profitability Challenges

Low profitability margins suggest Kratos may struggle with cost management, impacting its ability to generate sufficient returns and invest in future growth initiatives.

Cash Flow Management

Inefficient cash flow management could limit Kratos' operational flexibility and ability to fund strategic initiatives, posing a risk to its financial health and growth potential.

Cost Pressures

Rising costs on multiyear contracts can erode margins, affecting Kratos' profitability and competitiveness in the defense sector, potentially hindering long-term financial performance.

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 offers microwave electronic products, space and satellite communications, training and cybersecurity/ warfare, C5ISR/ modular systems, turbine technologies, and defense and rocket support services. The Unmanned Systems segment provides unmanned aerial systems, and unmanned ground and seaborne systems. It serves national security related agencies, the department of defense, intelligence agencies, and classified agencies, as well as international government agencies and domestic and international commercial customers. Kratos Defense & Security Solutions, Inc. was incorporated in 1994 and is headquartered in San Diego, California.

How the Company Makes Money

Kratos generates revenue primarily through government contracts, selling its products and services to various branches of the U.S. Department of Defense and other government agencies. Key revenue streams include the development and production of unmanned aerial systems, satellite communication technologies, and advanced cybersecurity solutions. The company also engages in research and development projects funded by government contracts, which contribute significantly to its earnings. Additionally, Kratos has established strategic partnerships with other defense contractors and technology firms, enhancing its capabilities and expanding its market reach, further supporting its financial performance.

Kratos Defense Financial Statement Overview

Summary

Kratos Defense shows moderate revenue growth but faces challenges with profitability and cash flow management. The company maintains a strong balance sheet with low leverage, providing financial stability, but needs to improve operational efficiency and cash flow generation.

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	1.21B	1.14B	1.04B	898.30M	811.50M	747.70M
Gross Profit	286.40M	287.20M	268.60M	226.00M	225.10M	203.20M
EBITDA	78.50M	96.40M	79.50M	26.50M	62.80M	64.40M
Net Income	14.50M	16.30M	-8.90M	-36.90M	-2.00M	79.60M
Balance Sheet
Total Assets	2.59B	1.95B	1.63B	1.55B	1.59B	1.56B
Cash, Cash Equivalents and Short-Term Investments	783.60M	329.30M	72.80M	81.30M	349.40M	380.80M
Total Debt	279.30M	282.00M	321.40M	301.80M	339.50M	348.50M
Total Liabilities	625.70M	597.70M	634.00M	604.00M	629.20M	622.70M
Stockholders Equity	1.96B	1.35B	976.00M	936.30M	945.10M	925.30M
Cash Flow
Free Cash Flow	-61.20M	-8.50M	12.80M	-71.10M	-15.70M	10.70M
Operating Cash Flow	10.80M	49.70M	65.20M	-25.70M	30.80M	46.60M
Investing Cash Flow	-72.00M	-69.70M	-43.80M	-177.40M	-52.10M	-87.30M
Financing Cash Flow	534.90M	277.60M	-30.70M	-63.30M	-9.30M	247.70M

Kratos Defense Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 91.21
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: 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 91.21 is below the 20-day moving average (MA) of 92.75, above the 50-day MA of 81.64, and above the 200-day MA of 49.87, indicating a neutral trend. The MACD of 1.53 indicates Positive momentum. The RSI at 50.16 is Neutral, neither overbought nor oversold. The STOCH value of 64.93 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for KTOS.

Kratos Defense Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
HII	―	$12.52B	22.35	11.59%	1.88%	-1.75%	-29.19%
ERJ	―	$11.99B	32.01	12.21%	0.08%	22.95%	-1.01%
AVAV	―	$18.27B	-569.83	-1.70%	―	44.04%	-129.81%
DRS	―	$9.59B	38.98	10.35%	0.70%	12.27%	33.16%
TXT	―	$14.00B	17.60	11.46%	0.10%	1.83%	-0.73%
KTOS	―	$14.90B	947.42	0.88%	―	7.76%	40.33%
Sector *	―	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%

Kratos Defense Corporate Events

Kratos Defense & Security’s Promising Q2 Earnings Call

Kratos Defense & Security Solutions recently held its second quarter 2025 earnings call, revealing a positive sentiment overall. The company showcased strong organic revenue growth, significant new program wins, and increased financial guidance, indicating a promising trajectory for future growth. However, the call also acknowledged ongoing challenges with cash flow and cost pressures in certain segments.

Kratos Defense Reports Strong Q2 2025 Growth

Kratos Defense & Security Solutions, Inc., a technology company operating in the defense, national security, and commercial markets, is known for its innovative and cost-effective solutions in areas such as unmanned aerial systems, hypersonic vehicles, and satellite communications.