Karman (NYSE:KRMN) Posts Earnings Results, Beats Expectations By $0.01 EPS

Karman (NYSE:KRMN) issued its quarterly earnings results on Thursday. The company reported $0.14 earnings per share (EPS) for the quarter, topping analysts’ consensus estimates of $0.13 by $0.01, FiscalAI reports. The business had revenue of $182.06 million during the quarter. Karman had a net margin of 5.73% and a return on equity of 14.94%. The firm’s quarterly revenue was up 58.2% on a year-over-year basis. During the same quarter last year, the firm posted $0.10 EPS.

Here are the key takeaways from Karman’s conference call:

• Record second-quarter performance: Revenue rose 58% year over year to $182 million, adjusted EBITDA increased 55% to $55 million, and backlog reached a record $1.3 billion. Bookings approached $500 million, providing management with 95% visibility to the midpoint of its 2026 revenue guidance.
• 2026 outlook raised: Karman now expects revenue of $730 million-$745 million and adjusted EBITDA of $215 million-$222.5 million, excluding the pending Walker Precision Engineering acquisition. Management reaffirmed expectations for at least 25% organic growth in 2026 and 20%-25% annual organic growth for the foreseeable future.
• Strong defense demand and growth opportunities: Demand for missiles, interceptors, munitions, unmanned systems, and submarine programs remains elevated, with some customers discussing production increases of up to 10 times current levels. Karman is also pursuing second-source positions and expects three additional contingent agreements to potentially convert into firm contracts by year-end.
• Capacity and strategic expansion: The company is building a 200,000-square-foot Salt Lake City facility, expanding production in Gulfport, and agreed to acquire Walker Precision Engineering for approximately $94 million to establish a European defense presence. Karman also repriced its term loan, lowering interest expense by about $4 million annually.
• Cash conversion and execution risks remain: Operations used $4 million of cash in the first half as receivables, contract assets, and capital expenditures rose alongside growth; management expects only $15 million-$20 million of free cash flow in the second half. Net leverage was approximately 3.7 times adjusted EBITDA, while remediation of a previously disclosed material weakness is not expected to be fully tested until early 2027.

Karman Trading Down 0.3%

Karman stock opened at $54.98 on Friday. Karman has a 1 year low of $43.68 and a 1 year high of $118.38. The firm’s 50-day moving average is $49.84 and its 200-day moving average is $73.24. The company has a debt-to-equity ratio of 2.08, a quick ratio of 3.38 and a current ratio of 3.53. The company has a market cap of $7.29 billion, a P/E ratio of 239.05 and a beta of 0.55.

Analyst Ratings Changes

Several research analysts have weighed in on the stock. Citigroup decreased their price objective on shares of Karman from $97.00 to $76.00 and set a “buy” rating for the company in a report on Wednesday, July 1st. Evercore set a $100.00 price target on shares of Karman in a research report on Wednesday, May 13th. Piper Sandler decreased their price target on Karman from $127.00 to $114.00 and set an “overweight” rating for the company in a research note on Tuesday, May 19th. Truist Financial upgraded Karman to a “strong-buy” rating in a research note on Friday, May 1st. Finally, Royal Bank Of Canada reduced their target price on Karman from $100.00 to $85.00 and set an “outperform” rating on the stock in a report on Friday, July 24th. Two equities research analysts have rated the stock with a Strong Buy rating, seven have assigned a Buy rating, one has assigned a Hold rating and one has issued a Sell rating to the company. According to MarketBeat.com, the company has an average rating of “Moderate Buy” and a consensus target price of $97.50.

Trending Headlines about Karman

Here are the key news stories impacting Karman this week:

• Positive Sentiment: Q2 results exceeded expectations: Karman reported quarterly EPS of $0.14, above the $0.13 consensus estimate and up from $0.10 a year earlier. Revenue rose 58.2% year over year to approximately $182.1 million. Karman Q2 Earnings and Revenues Top Estimates
• Positive Sentiment: Profitability improved materially: Gross profit reached $78.2 million, operating profit climbed to $34.8 million, and net income more than doubled to $14.0 million. Cash increased to $51.7 million, while total liabilities declined. The earnings release initially prompted a substantial increase in the stock price. Karman Second-Quarter Financial Results
• Positive Sentiment: Full-year revenue guidance was constructive: Karman projected fiscal 2026 revenue of $730 million to $745 million, compared with the $731.4 million analyst consensus. The range midpoint is modestly above expectations, suggesting continued growth momentum. Karman Guidance and Price Target Report
• Positive Sentiment: Debt refinancing should reduce financing costs: Karman amended its credit agreement, lowering interest costs and potentially supporting future earnings and cash flow. Karman Refinances Credit Agreement
• Neutral Sentiment: Analyst sentiment is mixed: Needham maintained a “buy” rating but reduced its price target from $125 to $80. The revised target still implies substantial upside, although the cut signals lower near-term expectations. Benzinga Analyst Update
• Negative Sentiment: Valuation remains demanding: KRMN trades at a very high earnings multiple, leaving the stock vulnerable to profit-taking or further target reductions if growth slows or execution disappoints.

Hedge Funds Weigh In On Karman

Several institutional investors have recently made changes to their positions in KRMN. EverSource Wealth Advisors LLC grew its stake in Karman by 889.7% during the 4th quarter. EverSource Wealth Advisors LLC now owns 386 shares of the company’s stock worth $28,000 after buying an additional 347 shares during the last quarter. CX Institutional acquired a new position in Karman during the 2nd quarter valued at about $28,000. Towarzystwo Funduszy Inwestycyjnych PZU SA bought a new stake in shares of Karman during the third quarter valued at approximately $29,000. Huntington National Bank acquired a new stake in Karman in the 4th quarter valued at approximately $32,000. Finally, Kestra Advisory Services LLC acquired a new stake in Karman in the 4th quarter valued at approximately $32,000.

Karman Company Profile

We specialize in the upfront design, testing, manufacturing, and sale of mission-critical systems for existing and emerging missile and defense, and space programs. Our integrated payload protection, propulsion, and interstage system solutions are deployed across a wide variety of existing and emerging programs supporting important Department of Defense (“DoD”) and space sector initiatives. We estimate that no single program accounted for more than 10% of sales for the nine months ended September 30, 2024 or the twelve months ended December 31, 2023, with revenue from over 100 active programs supporting current production and next-generation space, missile, hypersonic, and defense applications.