Kratos Defense & Security Solutions (NASDAQ:KTOS) Posts Earnings Results, Beats Expectations By $0.07 EPS

Kratos Defense & Security Solutions (NASDAQ:KTOS) issued its quarterly earnings data on Tuesday. The aerospace company reported $0.21 EPS for the quarter, topping the consensus estimate of $0.14 by $0.07, FiscalAI reports. The firm had revenue of $458.80 million for the quarter, compared to analyst estimates of $410.36 million. Kratos Defense & Security Solutions had a net margin of 2.03% and a return on equity of 3.37%. The business’s revenue for the quarter was up 30.5% compared to the same quarter last year. During the same period in the prior year, the business posted $0.11 EPS.

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

• Positive Sentiment: Kratos reported Q2 revenue of $458.8 million, up 19.1% organically year over year, while adjusted EBITDA of $38.2 million exceeded guidance. Management raised its full-year 2026 organic revenue growth outlook to 19%-23% and expects further growth and margin expansion in the second half and into 2027.
• Positive Sentiment: Hypersonics is expected to remain a major growth driver, with revenue projected to rise from approximately $200 million in 2025 to $400 million in 2026 and at least $700 million in 2027. The company cited new awards, approximately $400 million in recent hypersonic and related funding, and an operational Indiana integration facility supporting higher production rates.
• Positive Sentiment: Kratos is preparing for substantial engine demand tied to low-cost cruise missiles and future JASSM/LRASM production. It has begun ordering components for 3,000 Spartan turbojet engines targeted for 2027 and plans to support an additional 5,000 in 2028, while its GE turbofan partnership is expected to enter production beginning in 2028.
• Positive Sentiment: The company highlighted expanding opportunities across space, counter-UAS, directed energy, and unmanned systems, including a $160 million initial directed-energy award, a $100 million space-domain-awareness production award, and expected additional Valkyrie and Marine Corps orders. Management also cited potential international demand, including Taiwan-related Tactical Firejet and Valkyrie opportunities.
• Negative Sentiment: Cash flow was pressured by rapid growth and investment, with Q2 operating cash flow of negative $11 million and free cash flow of negative $18.9 million. Total 2026 investment is expected to remain elevated at approximately $250 million-$270 million, while the stronger Israeli shekel is forecast to reduce full-year EBITDA by roughly $5 million-$7 million.

Kratos Defense & Security Solutions Stock Performance

KTOS traded up $2.39 on Thursday, hitting $57.73. 3,370,041 shares of the company traded hands, compared to its average volume of 4,489,350. Kratos Defense & Security Solutions has a 12-month low of $43.09 and a 12-month high of $134.00. The company has a 50 day moving average of $52.50 and a 200-day moving average of $71.15. The company has a quick ratio of 5.08, a current ratio of 5.63 and a debt-to-equity ratio of 0.04. The stock has a market capitalization of $10.83 billion, a PE ratio of 339.57 and a beta of 1.08.

Insider Buying and Selling

In other Kratos Defense & Security Solutions news, insider Jonah Adelman sold 31,348 shares of the business’s stock in a transaction on Tuesday, May 26th. The shares were sold at an average price of $57.06, for a total value of $1,788,716.88. Following the transaction, the insider directly owned 8,000 shares of the company’s stock, valued at approximately $456,480. The trade was a 79.67% decrease in their position. The sale was disclosed in a filing with the SEC, which can be accessed through the SEC website. Also, CFO Deanna H. Lund sold 5,000 shares of the company’s stock in a transaction on Monday, June 1st. The stock was sold at an average price of $63.74, for a total transaction of $318,700.00. Following the transaction, the chief financial officer owned 290,161 shares of the company’s stock, valued at approximately $18,494,862.14. The trade was a 1.69% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. In the last ninety days, insiders sold 140,036 shares of company stock worth $7,810,417. 1.50% of the stock is currently owned by company insiders.

Hedge Funds Weigh In On Kratos Defense & Security Solutions

Several institutional investors and hedge funds have recently added to or reduced their stakes in the business. Mcguire Capital Advisors Inc. purchased a new stake in shares of Kratos Defense & Security Solutions in the fourth quarter valued at approximately $25,000. Rakuten Securities Inc. acquired a new stake in Kratos Defense & Security Solutions in the second quarter valued at $31,000. Kemnay Advisory Services Inc. acquired a new stake in Kratos Defense & Security Solutions in the fourth quarter valued at $37,000. NewEdge Advisors LLC boosted its position in shares of Kratos Defense & Security Solutions by 64.4% during the 1st quarter. NewEdge Advisors LLC now owns 1,315 shares of the aerospace company’s stock worth $39,000 after purchasing an additional 515 shares in the last quarter. Finally, Parallel Advisors LLC grew its stake in shares of Kratos Defense & Security Solutions by 44.1% during the 4th quarter. Parallel Advisors LLC now owns 526 shares of the aerospace company’s stock worth $40,000 after purchasing an additional 161 shares during the period. Institutional investors and hedge funds own 75.92% of the company’s stock.

Analysts Set New Price Targets

A number of equities research analysts have recently weighed in on KTOS shares. UBS Group reaffirmed a “neutral” rating and issued a $82.00 price objective on shares of Kratos Defense & Security Solutions in a research note on Thursday, May 7th. Cantor Fitzgerald lowered their target price on Kratos Defense & Security Solutions from $115.00 to $100.00 and set an “overweight” rating for the company in a report on Tuesday. Canaccord Genuity Group set a $135.00 price target on shares of Kratos Defense & Security Solutions in a research note on Wednesday. Stifel Nicolaus reduced their price target on shares of Kratos Defense & Security Solutions from $134.00 to $115.00 and set a “buy” rating on the stock in a research report on Thursday. Finally, JPMorgan Chase & Co. raised shares of Kratos Defense & Security Solutions from a “neutral” rating to an “overweight” rating and lowered their price objective for the company from $99.00 to $82.00 in a research note on Friday, June 12th. Three equities research analysts have rated the stock with a Strong Buy rating, seventeen have assigned a Buy rating and three have issued a Hold rating to the company’s stock. According to data from MarketBeat.com, Kratos Defense & Security Solutions presently has a consensus rating of “Buy” and a consensus price target of $101.29.

Key Headlines Impacting Kratos Defense & Security Solutions

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

• Positive Sentiment: New Javelin missile contract adds program visibility. Kratos received a U.S. Army DEVCOM contract to develop an Enhanced Seeker for the Javelin Close Combat Missile System. Although financial terms were not disclosed, the award supports Kratos’ position in missile and defense modernization programs. Kratos Receives U.S. Army Contract to Develop a Next-Generation Seeker for the Javelin Missile System
• Positive Sentiment: Second-quarter results exceeded expectations. Adjusted EPS was $0.21 versus approximately $0.13-$0.14 expected and $0.11 a year earlier. Revenue rose 30.5% to $458.8 million, well above estimates near $410 million, driven especially by Kratos Government Solutions. Kratos Reports Second Quarter 2026 Financial Results
• Positive Sentiment: Management raised its growth outlook. Full-year 2026 revenue guidance increased to about $1.8 billion, above the roughly $1.7 billion consensus, while organic growth is projected at 19%-23%. The company also cited strong bookings and demand spanning hypersonics, space, jet engines, counter-drone systems and unmanned aircraft. Kratos Forecasts 2026 Organic Revenue Growth
• Positive Sentiment: Analyst support improved. Piper Sandler upgraded KTOS, and BTIG raised its price target to $104 while maintaining a Buy rating, reinforcing the post-earnings recovery narrative. Kratos Defense Upgraded at Piper Sandler
• Neutral Sentiment: Third-quarter revenue guidance of $460 million-$480 million was broadly consistent with the $462.8 million analyst estimate, indicating continued growth but limited near-term guidance upside.
• Negative Sentiment: Valuation and insider selling remain risks. KTOS trades at a very high earnings multiple, increasing sensitivity to execution or growth disappointments. CFO Deanna Lund sold $242,750 of stock under a pre-arranged Rule 10b5-1 plan, though she retained approximately 280,487 shares. Kratos CFO Stock Sale

About Kratos Defense & Security Solutions

Kratos Defense & Security Solutions, Inc (NASDAQ: KTOS) is a technology-driven company that specializes in national security and defense solutions for government and military customers. The firm’s core capabilities span unmanned systems, satellite communications, missile defense, cyber security, and directed-energy weapons. Through its integrated approach, Kratos delivers mission-critical products and services designed to enhance operational readiness and support force modernization initiatives.

In the unmanned systems arena, Kratos develops high-performance aerial platforms used as target drones, low-cost attritable aircraft and experimental stealth demonstrators.