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Kratos Defense & Security Solutions
$9.3B
Market Cap
597.7
P/E
20.86
PEG
1.1%
ROCE
1.3%
ROE
0.06
D/E
1.9%
OPM
-59.4%
% from 52W High
26
α RS
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🌏 Global Investor Returns
Currency-adjusted total returns for KTOS including FX impact
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📈 Price History
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About

Kratos Defense & Security Solutions, Inc., a technology company, provides technology, hardware, products, system, and software for the defense, national security, and commercial markets in the United States, other North America, the Asia Pacific, the Middle East, Europe, and Internationally.

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📈 Growth Pattern
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⭐ Superinvestors Holding KTOS
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Manager Shares Value % of Fund Period
Cathie Wood ARK Investment Management 3.49M $246.2M 1.91% Mar 2026

SEC Form 13F data. 45-day lag from quarter end.

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📊 MIXED Kratos Q1 revenues $371M, record backlog $2B, 1.6x book-to-bill
Revenue & Profitability
Revenue was $371 million, exceeding the guidance range of $335-$345 million. Adjusted EBITDA was $38.7 million, above the $25-$30 million guidance. Organic revenue growth was 15.8% year-over-year. Cash flow used in operations was $27.4 million, and free cash flow used was $43.1 million. For Q2 2026, revenue guidance is $400-$410 million, and full-year 2026 revenue guidance is $1.7-$1.76 billion.
Outlook
Management is confident in a long-term increase in national security spending, citing bipartisan support and a projected $1.5 trillion for FY2027. The Department of Defense plans to fully obligate the $156 billion reconciliation bill in FY2026, benefiting Kratos programs. The global threat environment and need to rebuild the defense industrial base are key tailwinds, with no significant headwinds mentioned.
Growth Drivers
Key growth levers include hypersonic systems (MACH-TB program, $400 million revenue in 2026, $700 million in 2027), Valkyrie CCA (ramping to ~40 drones annually by early 2028), small jet engines (thousands per year starting 2027), and space/satellite (recent $447 million Space Force contract). The microwave electronics and turbine technologies businesses also showed strong organic growth of 12.3% and 20.3% respectively.
Balance Sheet & CapEx
Capital expenditure guidance for 2026 is $160 million, with elevated levels expected to continue into 2027. Specific investments include $50 million for the Prometheus joint venture, facilities for hypersonic integration, Anaconda radar, Helios, GEK/BladeWorks engines, and production capacity for drones. Working capital is also being deployed for long-lead materials and inventory to support growth.
Margins
Management expects 100 basis points of EBITDA margin improvement each year (2026 over 2025, 2027 over 2026). Q1 2026 EBITDA was particularly strong due to favorable mix and volume. As fixed costs are leveraged and higher-margin products (e.g., catalog microwave electronics, software) grow, margins are expected to expand further.
Key Risks
Key risks include supply chain constraints for hypersonic motors and jet engine components, labor shortages (especially in turbo machinery engineering), security clearance issues in states with legal marijuana, and delays in government contract awards (e.g., due to shutdowns or CRAs). Cash flow is pressured by working capital requirements for growth.
Generated by AI · Q1 2026 results · Not investment advice
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✓ 📞 Earnings Call Transcripts (5 quarters) submit a missing quarter
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📞 Earnings Call Transcripts (5)
Q2 2026 Q2 2026 2026-08-04
Q2 2026 saw revenue and EBITDA exceed guidance, driven by strong organic growth in hypersonics, engines, and defense segments. Full-year growth outlook was raised, with major investments in capacity and new program wins supporting future expansion.
Q1 2026 Q1 2026 2026-05-06
Q1 revenue and EBITDA exceeded guidance, driven by strong organic growth in Unmanned Systems, Turbine Technologies, and Microwave Products. Record backlog and major contract wins support a robust outlook, with continued investments in capacity and margin expansion expected through 2027.
Q4 2025 Q4 2025 2026-02-23
Q4 2025 saw 20% organic revenue growth, record backlog, and strong performance in hypersonics, microwave, and space. 2026 guidance projects 12.7%-18.5% organic growth, with continued investment in manufacturing and R&D. Major program wins and robust industry demand support a positive outlook.
Q3 2025 Q3 2025 2025-11-04
Q3 2025 saw strong revenue and EBITDA growth, driven by unmanned systems and hypersonics, with full-year guidance raised and multi-year growth targets set. Major program wins and the Orbit acquisition position the company for continued expansion, despite ongoing margin pressures from investment and contract costs.
Q2 2025 Q2 2025 2025-08-07
Q2 2025 revenue and EBITDA exceeded guidance, driven by strong growth in defense and C5ISR segments, with a robust pipeline and major program wins like Poseidon. Full-year guidance was raised, and margin expansion is expected as higher-margin programs ramp.
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📊 Analysis Methodology

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Financial Model
Projections are built from each company's audited annual financials (Income Statement, Balance Sheet, Cash Flow) over the last 5 fiscal years. Forward assumptions — revenue growth %, EBITDA margin, D&A (USD millions), interest expense, tax rate, and capex — are AI-generated using historical context and refreshed twice a year: after the December results season and after the September/Q4 results season.

DCF Valuation
Fair Value = Σ(FCFt / (1+WACC)t) + Terminal Value. Terminal Value uses the Gordon Growth Model: FCF5 × (1+g) / (WACC−g). Default WACC: 10% (US risk-free ~4.5%, equity risk premium ~5.5%). Default terminal growth: 3% (long-run US nominal GDP proxy).

CAGR Tracker
Expected 5-year CAGR = (DCF Fair Value / Current Price)1/5 − 1. Assumes fair value is reached in exactly 5 years — a mechanical estimate only.

Data Sources & Limitations
Financial statements sourced from public filings. Prices updated daily. Forward assumptions are AI-generated. All monetary values in USD millions. Non-US ADR companies may have currency conversion inaccuracies. Models are point-in-time and do not update intra-quarter or account for M&A, macro shocks, or extraordinary items.

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Investment Risk:
Investing in securities, including US equities and ETFs, involves inherent risks including the potential loss of principal. All investments are subject to market fluctuations, economic conditions, regulatory changes, and other factors that may affect their value. Past performance is not indicative of future results. This analysis is provided for informational and educational purposes only and should not be construed as investment advice under any circumstances.

No Investment Recommendation:
This analysis does not constitute, nor should it be interpreted as, an offer, solicitation, or recommendation to buy, sell, or hold any securities or financial products. Investors are strongly advised to conduct their own independent research and due diligence and to consult with a licensed financial advisor or an SEC-registered investment adviser before making any investment decisions, taking into account their individual financial situation, risk tolerance, and investment objectives.

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Conflict of Interest Disclosure:
The author and/or analyst may currently hold or have previously held positions in the securities discussed. Any such positions are not intended to influence the objectivity or independence of the analysis. This research is produced independently and is not sponsored, endorsed, or commissioned by any company or institution.

Information Sources:
The analysis is based on publicly available information including SEC filings (10-K, 10-Q), annual reports, management commentary, and publicly available financial data. Information is believed to be accurate as of the date of publication but may be subject to change without notice. Readers are encouraged to independently verify all information before acting upon it.

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