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

Key Points

• Kratos beat earnings expectations: EPS was $0.24 versus the $0.21 consensus, while revenue of $471.8 million was roughly in line with estimates and up 35.7% year over year.
• Demand and growth prospects were strong: Bookings reached $1.04 billion, backlog hit a record $2.6 billion, and management forecast 18%–22% revenue growth in 2027.
• Cash flow and execution remain risks: The company reported negative free cash flow of $29.4 million for the quarter and cited ongoing supply-chain and hiring constraints.

Kratos Defense & Security Solutions (NASDAQ:KTOS - Get Free Report) released its quarterly earnings results on Thursday. The aerospace company reported $0.24 earnings per share (EPS) for the quarter, topping the consensus estimate 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 business had revenue of $471.80 million for the quarter, compared to analyst estimates of $471.40 million. During the same period in the previous year, the company earned $0.14 earnings per share. The business's revenue for the quarter 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 Stock Performance

Shares of NASDAQ KTOS traded down $2.57 during mid-day trading on Thursday, hitting $33.39. The stock had a trading volume of 9,462,021 shares, compared to its average volume of 4,377,760. The firm has a market cap of $6.27 billion, a PE ratio of 74.92 and a beta of 1.18. The company has a debt-to-equity ratio of 0.04, a quick ratio of 4.99 and a current ratio of 5.54. The company has a 50 day moving average of $43.85 and a two-hundred day moving average of $63.03. Kratos Defense & Security Solutions has a twelve month low of $32.50 and a twelve month high of $134.00.

Wall Street Analysts Forecast Growth

A number of analysts have recently weighed in on KTOS shares. Truist Financial lowered their price objective on Kratos Defense & Security Solutions from $135.00 to $104.00 and set a "buy" rating for the company in a research report on Thursday, August 13th. B. Riley Financial decreased their price target on Kratos Defense & Security Solutions from $128.00 to $91.00 and set a "buy" rating for the company in a research note on Friday, October 30th. Rothschild & Co Redburn began coverage on Kratos Defense & Security Solutions in a report on Tuesday, October 6th. They issued a "buy" rating and a $70.00 price target for the company. Citigroup restated a "market outperform" rating on shares of Kratos Defense & Security Solutions in a research note on Monday, October 19th. Finally, Canaccord Genuity Group upped their price objective on shares of Kratos Defense & Security Solutions from $130.00 to $135.00 and gave the company a "buy" rating in a report on Wednesday, August 5th. Three equities research analysts have rated the stock with a Strong Buy rating, twenty have assigned a Buy rating, one has issued a Hold rating and two have given a Sell rating to the company's stock. According to MarketBeat.com, Kratos Defense & Security Solutions currently has an average rating of "Moderate Buy" and a consensus target price of $83.65.

Insider Activity at Kratos Defense & Security Solutions

In other Kratos Defense & Security Solutions news, SVP Marie Mendoza sold 1,000 shares of Kratos Defense & Security Solutions stock in a transaction dated Tuesday, September 15th. The stock was sold at an average price of $48.50, for a total transaction of $48,500.00. Following the completion of the sale, the senior vice president owned 61,200 shares of the company's stock, valued at approximately $2,968,200. The trade was a 1.61% decrease in their position. The sale was disclosed in a legal filing with the SEC, which can be accessed through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, insider Steven S. Fendley sold 7,000 shares of the business's stock in a transaction dated Monday, August 24th. The shares were sold at an average price of $56.16, for a total value of $393,120.00. Following the sale, the insider owned 288,111 shares in the company, valued at approximately $16,180,313.76. The trade was a 2.37% 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. Insiders have sold a total of 373,013 shares of company stock worth $23,340,582 in the last quarter. 1.50% of the stock is owned by insiders.

Key Kratos Defense & Security Solutions News

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

• Positive Sentiment: Q3 adjusted EPS was $0.24, above the $0.21 consensus and up from $0.14 a year earlier. Revenue rose 35.7% to $471.8 million, while bookings reached $1.037 billion and the consolidated book-to-bill ratio was 2.2 to 1—supportive signs of growth and demand. Kratos Q3 financial results
• Positive Sentiment: Q4 revenue guidance of $480 million–$510 million has a $495 million midpoint, slightly above analysts’ $493.5 million estimate. Benzinga also described the update as lifting the 2026 outlook. Kratos outlook report
• Neutral Sentiment: Q3 revenue was nearly exactly in line with estimates, and full-year revenue guidance was about $1.8 billion, matching consensus. Zacks Q3 metrics
• Negative Sentiment: Despite the adjusted-earnings beat, Kratos recorded a small GAAP net loss. The Q4 revenue guidance range also has a lower bound below consensus, which may temper the otherwise positive outlook. AP Q3 earnings snapshot

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.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.