- Record Backlog: Kratos achieved a record backlog of $1.573 billion, reflecting strong demand for military-grade solutions.
- Hypersonic Growth: Hypersonic franchise revenue to double to $400 million in 2026 and increase 75% to $700 million in 2027.
- Space & Satellite Milestone: Secured a $500 million program and expects higher margins in Q4 2026 from software-defined satellite contracts.
- Drone Dominance Award: Received a $1 billion award for small lethal drones over two years, accelerating tactical drone production.
- Capital Expenditures: 2026 CapEx forecast at $135–145 million, including $30–35 million rolled over from 2025 for hypersonic and unmanned systems.
Operational Highlights
The company achieved several operational milestones, including the successful completion of a factory acceptance testing between Kratos' Epic command and control software system and Airbus OneSat next-generation software-defined satellite platform. Kratos was also selected by the Pentagon to develop highly maneuverable Mach 5+ hypersonic missiles and expects to receive an additional $1 billion-plus hypersonic program-related opportunity by the end of the year. The company's hypersonic franchise is expected to ramp rapidly, driven by demand for its Zeus SRMs.
Guidance and Outlook
Kratos provided financial guidance for Q1 and full-year 2026, with expectations of revenue growth driven by its hypersonic, space, and satellite businesses. The company anticipates doubling its hypersonic revenue in 2026 to approximately $400 million and potentially increasing by 75% again in 2027 to approximately $700 million. Analysts estimate next year's revenue growth at 21.8%.
Valuation Metrics
To understand what's priced into Kratos' stock, we can examine its valuation metrics. The company has a P/E Ratio of 702.77, P/B Ratio of 7.74, and P/S Ratio of 11.47. Additionally, its EV/EBITDA is 214.11. These metrics suggest that the market has high expectations for Kratos' future growth, particularly in its hypersonic and space businesses. As Eric DeMarco noted, "Kratos is the most valuable defense company in the industry, private or public," reflecting the market's confidence in the company's business plan and growth prospects.
Growth Drivers
Kratos' growth is driven by several factors, including its hypersonic franchise, space and satellite business, and Microwave Electronics business. The company is well-positioned to capitalize on the increasing demand for affordable military-grade hardware and software, with a strong backlog of $1.573 billion. Kratos' strategy of being first to market with relevant products is a differentiator, and its operational updates, including the expansion of its Birmingham advanced manufacturing facility, position it for long-term success.