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1. Company Snapshot

1.a. 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.

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1.b. Last Insights on KTOS

Breaking News: Kratos Defense & Security Solutions Inc has seen significant growth with its defense footprint and prospects boosted by new facilities and strong drone demand. The company has a solid backlog which is expected to drive future growth. As of the recent news, Kratos Defense rallied with no specific earnings release available. Analysts have given optimistic views on the company. For instance, some analysts have recommended a buy. The company's expanding presence and increasing demand in the defense sector are key factors to watch. Kratos Defense is building on its strengths.

1.c. Company Highlights

2. Kratos Defense & Security Solutions: Strong Q3 Performance and Elevated Growth Outlook

Kratos Defense & Security Solutions reported a robust Q3 with revenue reaching $347.6 million, surpassing the estimated range, and adjusted EBITDA of $30.8 million, also above expectations. The company's earnings per share (EPS) came in at $0.14, beating the estimated $0.12. The strong financial performance was driven by organic revenue growth across all businesses, with the Unmanned Systems business seeing significant growth, up $23 million or 35.8% organically.

Publication Date: Nov -09

📋 Highlights
  • Revenue Growth Forecasts Raised: Full-year 2025 revenue guidance raised to $1.31–$1.33B (14–15% organic growth), with 2026 projected at 15–20% and 2027 at 18–23% organic growth.
  • Valkyrie Program Expansion: Shipped first two Valkyrie aircraft to Airbus in Q3, with a $270M development contract and partnerships with Northrop Grumman and Korea Aerospace Industries.
  • Orbit Acquisition: Acquired Orbit for $356M (23% EBITDA margin), expected to be immediately accretive, enhancing satellite communication capabilities.
  • Strong Q3 Financial Performance: Revenue of $347.6M and adjusted EBITDA of $30.8M exceeded estimates, with all business units showing organic growth.
  • Hypersonics and Franchise Projections: Hypersonics expected to reach $1B revenue by 2028, with Prometheus rocket motor facility targeting $1B+ and Valkyrie drone production capacity at 50 units/year.

Revenue Growth and Margin Expansion

The company has raised its full-year 2025 revenue forecast to 14-15% organic growth, up from 11-13%, and increased its 2026 organic revenue growth forecast to 15-20%, up from 13-15%. A preliminary 2027 revenue growth target of 18-23% organic growth is provided, indicating a strong growth trajectory. Kratos expects an approximate 100 basis point EBITDA margin expansion for 2026 and another 100 basis point margin expansion in 2027, driven by programmatic wins and a reduction in bid and proposal costs.

Valuation Metrics

With a P/E Ratio of 663.93 and an EV/EBITDA of 192.97, the market appears to be pricing in significant growth expectations. The P/S Ratio of 10.23 also suggests that investors are anticipating strong revenue growth. To assess whether these expectations are reasonable, it's essential to monitor Kratos' progress on its major programs, such as the Valkyrie unmanned combat aircraft and the hypersonic franchise.

Operational Highlights

Kratos' Valkyrie program is progressing, with a partnership with Northrop Grumman and an expected initial formal contract award in the next few months. The company also partnered with Airbus to develop a German variant of the Valkyrie CCA, with the first two Valkyries shipped to Airbus in Q3. Additionally, Kratos unveiled its Ragnarok low-cost cruise missile, which was displayed stowed in the weapons bay of the Valkyrie at the U.S. Marine's Miramar Air Show.

Future Growth Drivers

The company's growth is expected to be driven by programmatic wins, including hypersonic and rocket systems, with KUS and KGS contributing to the growth. Kratos' hypersonic franchise is growing, with several projects moving into production in 2026 and 2027. The company's Rocket System business is expected to become the largest division, surpassing its space business. As Eric DeMarco noted, "Hypersonics could become the largest single franchise within Kratos, reaching $1 billion in revenue by 2028, driven by funding of various programs."

3. NewsRoom

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KTOS Stock Rises 14.4% in 3 Months: What's the Next Best Move?

Dec -04

Source: zacks.com

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Voya MidCap Opportunities Strategy Q3 2025 Portfolio Review

Dec -01

Source: seekingalpha.com

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Head to Head Comparison: Optex Systems (NASDAQ:OPXS) & Kratos Defense & Security Solutions (NASDAQ:KTOS)

Dec -01

Source: defenseworld.net

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Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) Given Consensus Recommendation of “Moderate Buy” by Analysts

Nov -29

Source: defenseworld.net

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KTOS vs. ESLT: Which Defense Stock Leads the Unmanned Systems Boom?

Nov -25

Source: zacks.com

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Creative Planning Grows Stake in Kratos Defense & Security Solutions, Inc. $KTOS

Nov -24

Source: defenseworld.net

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7,969 Shares in Kratos Defense & Security Solutions, Inc. $KTOS Acquired by Connor Clark & Lunn Investment Management Ltd.

Nov -21

Source: defenseworld.net

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Kratos Defense & Security Solutions (NASDAQ:KTOS) Shares Down 4.8% on Insider Selling

Nov -21

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.41%)

6. Segments

Kratos Government Solutions

Expected Growth: 7%

Kratos Government Solutions' 7% growth is driven by increasing demand for cybersecurity, satellite communications, and unmanned systems. The segment benefits from its diversified portfolio, strong relationships with government agencies, and strategic acquisitions. Additionally, growing investments in digital modernization, cloud computing, and artificial intelligence across the US defense sector contribute to its growth momentum.

Unmanned Systems

Expected Growth: 9%

Kratos Defense & Security Solutions' Unmanned Systems segment growth is driven by increasing demand for autonomous systems in military and commercial applications, advancements in drone technology, and rising adoption of unmanned systems for surveillance, reconnaissance, and combat missions. Additionally, government investments in defense modernization and the need for cost-effective solutions contribute to the segment's 9% growth.

7. Detailed Products

Unmanned Systems

Kratos Defense & Security Solutions, Inc. offers a range of unmanned systems, including drones and unmanned aerial vehicles (UAVs), designed for military, surveillance, and reconnaissance applications.

Satellite Communications

Kratos provides satellite communications solutions, including satellite terminals, modems, and network infrastructure, for government and commercial customers.

Cybersecurity

Kratos offers a range of cybersecurity solutions, including penetration testing, vulnerability assessment, and incident response, to protect against cyber threats.

Training and Simulation

Kratos provides training and simulation solutions, including virtual reality and live-fire ranges, for military and law enforcement agencies.

Electronic Warfare

Kratos offers electronic warfare solutions, including radar and communication systems, for military and defense applications.

C5ISR (Command, Control, Communications, Computers, Combat Systems, Intelligence, Surveillance, and Reconnaissance)

Kratos provides C5ISR solutions, including command and control systems, for military and defense applications.

8. Kratos Defense & Security Solutions, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Kratos Defense & Security Solutions, Inc. has a low threat of substitutes due to its specialized products and services in the defense and security industry.

Bargaining Power Of Customers

Kratos Defense & Security Solutions, Inc. has a medium bargaining power of customers due to the presence of a few large customers in the defense and security industry.

Bargaining Power Of Suppliers

Kratos Defense & Security Solutions, Inc. has a low bargaining power of suppliers due to its diversified supplier base and lack of dependence on a single supplier.

Threat Of New Entrants

Kratos Defense & Security Solutions, Inc. has a high threat of new entrants due to the increasing demand for defense and security products and services, making it an attractive market for new entrants.

Intensity Of Rivalry

Kratos Defense & Security Solutions, Inc. operates in a moderately competitive industry, with a few established players competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 19.25%
Debt Cost 7.97%
Equity Weight 80.75%
Equity Cost 7.97%
WACC 7.97%
Leverage 23.84%

11. Quality Control: Kratos Defense & Security Solutions, Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Spirit AeroSystems

A-Score: 5.1/10

Value: 9.6

Growth: 1.1

Quality: 5.2

Yield: 0.0

Momentum: 7.5

Volatility: 7.3

1-Year Total Return ->

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Stock-Card
Leonardo DRS

A-Score: 4.6/10

Value: 2.0

Growth: 3.7

Quality: 6.2

Yield: 1.0

Momentum: 9.5

Volatility: 5.3

1-Year Total Return ->

View Full Report
Stock-Card
AeroVironment

A-Score: 4.5/10

Value: 4.4

Growth: 6.2

Quality: 4.7

Yield: 0.0

Momentum: 9.0

Volatility: 2.7

1-Year Total Return ->

View Full Report
Stock-Card
AAR

A-Score: 4.4/10

Value: 4.5

Growth: 4.9

Quality: 3.1

Yield: 0.0

Momentum: 8.5

Volatility: 5.3

1-Year Total Return ->

View Full Report
Stock-Card
Kratos Defense

A-Score: 4.2/10

Value: 2.2

Growth: 5.2

Quality: 4.3

Yield: 0.0

Momentum: 10.0

Volatility: 3.3

1-Year Total Return ->

View Full Report
Stock-Card
Hexcel

A-Score: 4.1/10

Value: 1.5

Growth: 4.3

Quality: 4.3

Yield: 1.0

Momentum: 6.0

Volatility: 7.3

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

76.5$

Current Price

76.5$

Potential

-0.00%

Expected Cash-Flows