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KRATOS DEFENSE & SECURITY (KTOS) Stock Fundamental Analysis

NASDAQ:KTOS - Nasdaq - US50077B2079 - Common Stock - Currency: USD

25.29  -0.7 (-2.69%)

After market: 25.4 +0.11 (+0.43%)

Fundamental Rating

5

We assign a fundamental rating of 5 out of 10 to KTOS. KTOS was compared to 65 industry peers in the Aerospace & Defense industry. The financial health of KTOS is average, but there are quite some concerns on its profitability. KTOS is valued quite expensive, but it does show an excellent growth.


Dividend Valuation Growth Profitability Health

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3

1. Profitability

1.1 Basic Checks

KTOS had positive earnings in the past year.
KTOS had a positive operating cash flow in the past year.
The reported net income has been mixed in the past 5 years: KTOS reported negative net income in multiple years.
KTOS had a positive operating cash flow in 4 of the past 5 years.
KTOS Yearly Net Income VS EBIT VS OCF VS FCFKTOS Yearly Net Income VS EBIT VS OCF VS FCFYearly Net Income VS EBIT VS OCF VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 50M -50M 100M 150M 200M

1.2 Ratios

KTOS's Return On Assets of 0.77% is in line compared to the rest of the industry. KTOS outperforms 43.75% of its industry peers.
With a Return On Equity value of 1.10%, KTOS perfoms like the industry average, outperforming 45.31% of the companies in the same industry.
The Return On Invested Capital of KTOS (1.83%) is worse than 64.06% of its industry peers.
The Average Return On Invested Capital over the past 3 years for KTOS is significantly below the industry average of 7.98%.
The 3 year average ROIC (1.31%) for KTOS is below the current ROIC(1.83%), indicating increased profibility in the last year.
Industry RankSector Rank
ROA 0.77%
ROE 1.1%
ROIC 1.83%
ROA(3y)-1.02%
ROA(5y)0.62%
ROE(3y)-1.69%
ROE(5y)1.14%
ROIC(3y)1.31%
ROIC(5y)1.8%
KTOS Yearly ROA, ROE, ROICKTOS Yearly ROA, ROE, ROICYearly ROA, ROE, ROIC 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 -10 -20

1.3 Margins

KTOS has a Profit Margin of 1.31%. This is comparable to the rest of the industry: KTOS outperforms 45.31% of its industry peers.
With a Operating Margin value of 3.40%, KTOS is not doing good in the industry: 60.94% of the companies in the same industry are doing better.
KTOS's Operating Margin has declined in the last couple of years.
KTOS has a Gross Margin (25.67%) which is comparable to the rest of the industry.
KTOS's Gross Margin has been stable in the last couple of years.
Industry RankSector Rank
OM 3.4%
PM (TTM) 1.31%
GM 25.67%
OM growth 3Y-9.68%
OM growth 5Y-10.86%
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y-1.59%
GM growth 5Y-1.16%
KTOS Yearly Profit, Operating, Gross MarginsKTOS Yearly Profit, Operating, Gross MarginsYearly Profit, Operating, Gross Margins 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 10 -10 20

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6

2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so KTOS is destroying value.
Compared to 1 year ago, KTOS has more shares outstanding
The number of shares outstanding for KTOS has been increased compared to 5 years ago.
Compared to 1 year ago, KTOS has an improved debt to assets ratio.
KTOS Yearly Shares OutstandingKTOS Yearly Shares OutstandingYearly Shares Outstanding 2015 2016 2017 2018 2019 2020 2021 2022 2023 20M 40M 60M 80M 100M
KTOS Yearly Total Debt VS Total AssetsKTOS Yearly Total Debt VS Total AssetsYearly Total Debt VS Total Assets 2015 2016 2017 2018 2019 2020 2021 2022 2023 500M 1B 1.5B

2.2 Solvency

An Altman-Z score of 4.71 indicates that KTOS is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 4.71, KTOS is in the better half of the industry, outperforming 68.75% of the companies in the same industry.
The Debt to FCF ratio of KTOS is 32.24, which is on the high side as it means it would take KTOS, 32.24 years of fcf income to pay off all of its debts.
KTOS has a Debt to FCF ratio (32.24) which is comparable to the rest of the industry.
A Debt/Equity ratio of 0.18 indicates that KTOS is not too dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.18, KTOS is in the better half of the industry, outperforming 75.00% of the companies in the same industry.
Industry RankSector Rank
Debt/Equity 0.18
Debt/FCF 32.24
Altman-Z 4.71
ROIC/WACC0.2
WACC9.25%
KTOS Yearly LT Debt VS Equity VS FCFKTOS Yearly LT Debt VS Equity VS FCFYearly LT Debt VS Equity VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 200M 400M 600M 800M

2.3 Liquidity

KTOS has a Current Ratio of 3.22. This indicates that KTOS is financially healthy and has no problem in meeting its short term obligations.
Looking at the Current ratio, with a value of 3.22, KTOS is in the better half of the industry, outperforming 78.13% of the companies in the same industry.
KTOS has a Quick Ratio of 2.61. This indicates that KTOS is financially healthy and has no problem in meeting its short term obligations.
The Quick ratio of KTOS (2.61) is better than 84.38% of its industry peers.
Industry RankSector Rank
Current Ratio 3.22
Quick Ratio 2.61
KTOS Yearly Current Assets VS Current LiabilitesKTOS Yearly Current Assets VS Current LiabilitesYearly Current Assets VS Current Liabilites 2015 2016 2017 2018 2019 2020 2021 2022 2023 200M 400M 600M

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8

3. Growth

3.1 Past

KTOS shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 37.14%, which is quite impressive.
KTOS shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 10.20% yearly.
The Revenue has grown by 11.30% in the past year. This is quite good.
The Revenue has been growing by 10.91% on average over the past years. This is quite good.
EPS 1Y (TTM)37.14%
EPS 3Y0%
EPS 5Y10.2%
EPS Q2Q%-8.33%
Revenue 1Y (TTM)11.3%
Revenue growth 3Y11.52%
Revenue growth 5Y10.91%
Sales Q2Q%0.47%

3.2 Future

Based on estimates for the next years, KTOS will show a very strong growth in Earnings Per Share. The EPS will grow by 24.09% on average per year.
KTOS is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 13.42% yearly.
EPS Next Y21.59%
EPS Next 2Y23.64%
EPS Next 3Y25.46%
EPS Next 5Y24.09%
Revenue Next Year12.14%
Revenue Next 2Y12.17%
Revenue Next 3Y13.21%
Revenue Next 5Y13.42%

3.3 Evolution

The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
KTOS Yearly Revenue VS EstimatesKTOS Yearly Revenue VS EstimatesYearly Revenue VS Estimates 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 500M 1B 1.5B 2B 2.5B
KTOS Yearly EPS VS EstimatesKTOS Yearly EPS VS EstimatesYearly EPS VS Estimates 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 0 0.5 -0.5 1 1.5

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2

4. Valuation

4.1 Price/Earnings Ratio

KTOS is valuated quite expensively with a Price/Earnings ratio of 52.69.
The rest of the industry has a similar Price/Earnings ratio as KTOS.
Compared to an average S&P500 Price/Earnings ratio of 29.63, KTOS is valued quite expensively.
The Price/Forward Earnings ratio is 42.42, which means the current valuation is very expensive for KTOS.
The rest of the industry has a similar Price/Forward Earnings ratio as KTOS.
When comparing the Price/Forward Earnings ratio of KTOS to the average of the S&P500 Index (22.68), we can say KTOS is valued expensively.
Industry RankSector Rank
PE 52.69
Fwd PE 42.42
KTOS Price Earnings VS Forward Price EarningsKTOS Price Earnings VS Forward Price Earnings ChartPrice Earnings - Forward Price Earnings PE FPE 10 20 30 40 50

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, KTOS is valued a bit more expensive than 62.50% of the companies in the same industry.
KTOS's Price/Free Cash Flow is on the same level as the industry average.
Industry RankSector Rank
P/FCF 508.6
EV/EBITDA 50.53
KTOS Per share dataKTOS EPS, Sales, OCF, FCF, BookValue per sharePer Share Data Per Share 2 4 6 8

4.3 Compensation for Growth

The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
KTOS's earnings are expected to grow with 25.46% in the coming years. This may justify a more expensive valuation.
PEG (NY)2.44
PEG (5Y)5.17
EPS Next 2Y23.64%
EPS Next 3Y25.46%

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0

5. Dividend

5.1 Amount

KTOS does not give a dividend.
Industry RankSector Rank
Dividend Yield N/A

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KRATOS DEFENSE & SECURITY

NASDAQ:KTOS (2/21/2025, 8:00:02 PM)

After market: 25.4 +0.11 (+0.43%)

25.29

-0.7 (-2.69%)

Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryAerospace & Defense
Earnings (Last)11-07 2024-11-07/amc
Earnings (Next)02-26 2025-02-26/amc
Inst Owners89.76%
Inst Owner Change3.15%
Ins Owners1.54%
Ins Owner Change-0.98%
Market Cap3.87B
Analysts78.89
Price Target32.83 (29.81%)
Short Float %3.28%
Short Ratio2.69
Dividend
Industry RankSector Rank
Dividend Yield N/A
Yearly DividendN/A
Dividend Growth(5Y)N/A
DPN/A
Div Incr Years0
Div Non Decr Years0
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)45.41%
Min EPS beat(2)29.15%
Max EPS beat(2)61.67%
EPS beat(4)4
Avg EPS beat(4)60.05%
Min EPS beat(4)29.15%
Max EPS beat(4)112.58%
EPS beat(8)8
Avg EPS beat(8)43.43%
EPS beat(12)12
Avg EPS beat(12)49.5%
EPS beat(16)14
Avg EPS beat(16)38.63%
Revenue beat(2)1
Avg Revenue beat(2)2.05%
Min Revenue beat(2)-2.42%
Max Revenue beat(2)6.52%
Revenue beat(4)3
Avg Revenue beat(4)4.53%
Min Revenue beat(4)-2.42%
Max Revenue beat(4)8.5%
Revenue beat(8)7
Avg Revenue beat(8)4.34%
Revenue beat(12)8
Avg Revenue beat(12)2.91%
Revenue beat(16)10
Avg Revenue beat(16)1.62%
PT rev (1m)10.89%
PT rev (3m)18.73%
EPS NQ rev (1m)-1.62%
EPS NQ rev (3m)-14.73%
EPS NY rev (1m)-0.39%
EPS NY rev (3m)-0.64%
Revenue NQ rev (1m)-0.24%
Revenue NQ rev (3m)-1.21%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-0.34%
Valuation
Industry RankSector Rank
PE 52.69
Fwd PE 42.42
P/S 3.43
P/FCF 508.6
P/OCF 54.06
P/B 2.88
P/tB 5.38
EV/EBITDA 50.53
EPS(TTM)0.48
EY1.9%
EPS(NY)0.6
Fwd EY2.36%
FCF(TTM)0.05
FCFY0.2%
OCF(TTM)0.47
OCFY1.85%
SpS7.37
BVpS8.79
TBVpS4.7
PEG (NY)2.44
PEG (5Y)5.17
Profitability
Industry RankSector Rank
ROA 0.77%
ROE 1.1%
ROCE 2.32%
ROIC 1.83%
ROICexc 2.24%
ROICexgc 4.17%
OM 3.4%
PM (TTM) 1.31%
GM 25.67%
FCFM 0.67%
ROA(3y)-1.02%
ROA(5y)0.62%
ROE(3y)-1.69%
ROE(5y)1.14%
ROIC(3y)1.31%
ROIC(5y)1.8%
ROICexc(3y)1.55%
ROICexc(5y)2.22%
ROICexgc(3y)3.17%
ROICexgc(5y)4.94%
ROCE(3y)1.65%
ROCE(5y)2.28%
ROICexcg growth 3Y-9.73%
ROICexcg growth 5Y-19.97%
ROICexc growth 3Y-7.4%
ROICexc growth 5Y-13.16%
OM growth 3Y-9.68%
OM growth 5Y-10.86%
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y-1.59%
GM growth 5Y-1.16%
F-Score7
Asset Turnover0.59
Health
Industry RankSector Rank
Debt/Equity 0.18
Debt/FCF 32.24
Debt/EBITDA 3.14
Cap/Depr 163.01%
Cap/Sales 5.67%
Interest Coverage 250
Cash Conversion 92.26%
Profit Quality 51.35%
Current Ratio 3.22
Quick Ratio 2.61
Altman-Z 4.71
F-Score7
WACC9.25%
ROIC/WACC0.2
Cap/Depr(3y)162.54%
Cap/Depr(5y)149.19%
Cap/Sales(3y)5.28%
Cap/Sales(5y)4.86%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)37.14%
EPS 3Y0%
EPS 5Y10.2%
EPS Q2Q%-8.33%
EPS Next Y21.59%
EPS Next 2Y23.64%
EPS Next 3Y25.46%
EPS Next 5Y24.09%
Revenue 1Y (TTM)11.3%
Revenue growth 3Y11.52%
Revenue growth 5Y10.91%
Sales Q2Q%0.47%
Revenue Next Year12.14%
Revenue Next 2Y12.17%
Revenue Next 3Y13.21%
Revenue Next 5Y13.42%
EBIT growth 1Y53.82%
EBIT growth 3Y0.73%
EBIT growth 5Y-1.13%
EBIT Next Year299.49%
EBIT Next 3Y79.19%
EBIT Next 5Y60.6%
FCF growth 1Y109.14%
FCF growth 3Y6.16%
FCF growth 5YN/A
OCF growth 1Y302.55%
OCF growth 3Y11.85%
OCF growth 5Y44.36%