Kratos Defense & Security Solutions (NASDAQ:KTOS) Announces Earnings Results

Kratos Defense & Security Solutions (NASDAQ:KTOS) posted its earnings results on Thursday. The aerospace company reported $0.24 earnings per share (EPS) for the quarter, beating analysts’ consensus estimates of $0.21 by $0.03, FiscalAI reports. Kratos Defense & Security Solutions had a net margin of 2.03% and a return on equity of 3.07%. The firm had revenue of $471.80 million during the quarter, compared to analyst estimates of $471.40 million. During the same period in the previous year, the business posted $0.14 EPS. Kratos Defense & Security Solutions’s revenue was up 35.7% on a year-over-year basis.

Here are the key takeaways from Kratos Defense & Security Solutions’ conference call:

• Q3 results showed strong growth and demand: Revenue rose 35.7% year over year, including 23.2% organic growth, while adjusted EBITDA was $50.9 million. Bookings reached $1.04 billion, a 2.2-to-1 book-to-bill ratio, and backlog grew to a record $2.6 billion.
• Kratos forecast 18%-22% revenue growth in 2027, with revenue of $2.1 billion-$2.2 billion and adjusted EBITDA of $230 million-$240 million. Management called the initial outlook conservative, citing budget uncertainty and supply-chain challenges, and said its internal forecast is higher.
• Unmanned aircraft prospects strengthened: Kratos received a Valkyrie low-rate initial production contract, expects additional Valkyrie awards in 2027, and plans to roughly triple Firejet production capacity by the end of 2027. Management expects unmanned systems to be among the company’s strongest organic growers next year.
• Hypersonics and propulsion are positioned for substantial growth: Management expects about $700 million in hypersonics revenue in 2027 and cited several hundred million dollars of additional funding and three new program awards. The company is also preparing to build 3,000 turbojet engines in 2027, though it expects to deliver about 1,500 that year.
• Investment and execution risks remain: Q3 operating cash flow was negative $5.2 million and free cash flow was negative $29.4 million, while days sales outstanding rose to 125. Management said supply-chain and hiring constraints persist, and expects the company to become sustainably cash-flow positive in 2029 as production ramps.

Kratos Defense & Security Solutions Price Performance

Shares of NASDAQ KTOS traded up $0.58 during mid-day trading on Friday, reaching $33.98. 2,667,232 shares of the company traded hands, compared to its average volume of 4,376,542. Kratos Defense & Security Solutions has a fifty-two week low of $31.57 and a fifty-two week high of $134.00. The company has a debt-to-equity ratio of 0.04, a current ratio of 5.54 and a quick ratio of 4.99. The firm has a market cap of $6.38 billion, a PE ratio of 200.42 and a beta of 1.18. The stock has a fifty day simple moving average of $43.85 and a 200-day simple moving average of $63.03.

Insider Transactions at Kratos Defense & Security Solutions

In related news, insider Phillip Carrai sold 6,500 shares of the firm’s stock in a transaction dated Thursday, October 15th. The stock was sold at an average price of $39.86, for a total transaction of $259,090.00. Following the completion of the transaction, the insider owned 169,196 shares of the company’s stock, valued at $6,744,152.56. This trade represents a 3.70% decrease in their ownership of the stock. The sale was disclosed in a filing with the SEC, which is available through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, insider Steven Fendley sold 7,000 shares of the stock in a transaction that occurred on Monday, August 24th. The shares were sold at an average price of $56.16, for a total transaction of $393,120.00. Following the sale, the insider directly owned 288,111 shares of the company’s stock, valued at approximately $16,180,313.76. This represents a 2.37% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders sold a total of 373,013 shares of company stock valued at $23,340,582 over the last three months. 1.50% of the stock is owned by company insiders.

Analysts Set New Price Targets

Several equities analysts have recently issued reports on the company. Guggenheim assumed coverage on Kratos Defense & Security Solutions in a research report on Monday, September 14th. They set a “buy” rating and a $74.00 price objective for the company. Citizens Jmp lowered their target price on Kratos Defense & Security Solutions from $105.00 to $70.00 and set a “market outperform” rating on the stock in a research report on Monday, October 19th. Barclays began coverage on Kratos Defense & Security Solutions in a research note on Friday, October 9th. They set an “overweight” rating and a $90.00 target price on the stock. BNP Paribas Exane upgraded Kratos Defense & Security Solutions from a “neutral” rating to an “outperform” rating in a research report on Thursday, October 8th. Finally, Citigroup reissued a “market outperform” rating on shares of Kratos Defense & Security Solutions in a research note on Monday, October 19th. Three equities research analysts have rated the stock with a Strong Buy rating, twenty have issued a Buy rating, one has issued a Hold rating and two have given a Sell rating to the stock. According to data from MarketBeat, Kratos Defense & Security Solutions currently has a consensus rating of “Moderate Buy” and a consensus price target of $81.70.

Key Headlines Impacting Kratos Defense & Security Solutions

Here are the key news stories impacting Kratos Defense & Security Solutions this week:

• Positive Sentiment: Third-quarter revenue rose 35.7% year over year to $471.8 million, roughly in line with estimates, while adjusted earnings of $0.24 per share beat the $0.21 consensus. The company also reported a 2.2-to-1 book-to-bill ratio, with orders more than twice sales and backlog reaching $2.65 billion. Kratos Reports Third Quarter 2026 Financial Results
• Positive Sentiment: Management’s 2026 outlook and expected hypersonics growth offer potential support. Fourth-quarter revenue guidance is $480 million–$510 million; its midpoint is close to analysts’ estimate of $493.5 million. Kratos Q3 2026 Earnings Call Transcript
• Negative Sentiment: Despite adjusted profitability, Kratos recorded a small GAAP net loss, and reports highlighted negative free cash flow and a GAAP operating loss. That gap between growth and cash generation may concern investors. Kratos Sales Up 36%, Free Cash Flow Negative
• Negative Sentiment: BTIG cut its price target to $65 from $104, although it kept a Buy rating. The reduction signals a more cautious valuation view and may weigh on sentiment even with substantial stated upside from the reference price. BTIG Research stock recommendations

Kratos Defense & Security Solutions Company Profile

Kratos Defense & Security Solutions, Inc is a technology and defense contractor that develops systems and products for national security applications. The company supports the U.S. Department of Defense, intelligence agencies, national security-related organizations and selected commercial customers, with an emphasis on affordable, rapidly deployable technologies.

Its offerings include unmanned aerial and target systems, hypersonic and high-speed systems, rocket and propulsion technologies, satellite communications equipment, microwave electronics, radar and missile-defense systems, electronic warfare solutions, command-and-control systems, and virtual and live training products.