Kratos Defense & Security Solutions (NASDAQ:KTOS) Announces Quarterly Earnings Results, Beats Estimates By $0.03 EPS

Key Points

• Kratos beat Q1 estimates with $0.16 EPS vs. $0.13 and $371M revenue (up 22.6% YoY), and raised FY26 guidance to $1.70–$1.76B revenue and adjusted EBITDA of $170–$176M, backed by a record $2B backlog and ~$14B opportunity pipeline.
• Management flagged the space/satellite business (including a $447M U.S. Space Force contract) and expanding hypersonics/propulsion franchises—guiding roughly $400M in hypersonics for 2026 and ~$700M for 2027—as multi‑year growth drivers with LRIP plans for small jet engines.
• Near‑term risks include weak cash generation (Q1 used operating cash of ~$27.4M and free cash flow of ~$43.1M), rising DSO (~130 days) and elevated CapEx (~$160M guidance), while the stock trades at a very high P/E amid recent insider selling.

Kratos Defense & Security Solutions (NASDAQ:KTOS - Get Free Report) released its quarterly earnings data on Wednesday. The aerospace company reported $0.16 earnings per share for the quarter, topping the consensus estimate of $0.13 by $0.03, FiscalAI reports. Kratos Defense & Security Solutions had a net margin of 1.63% and a return on equity of 3.34%. The business had revenue of $371.00 million for the quarter, compared to analyst estimates of $344.99 million. During the same quarter last year, the firm earned $0.12 EPS. Kratos Defense & Security Solutions's quarterly revenue was up 22.6% compared to the same quarter last year.

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

• Kratos materially outperformed Q1 expectations with $371M in revenue, $38.7M adjusted EBITDA, a record backlog of $2B, a 1.6:1 company book‑to‑bill and a $14B opportunity pipeline, signaling strong near‑term demand and execution.
• The space/satellite business (OpenSpace software and space domain awareness) is highlighted as a major growth driver after winning a $447M U.S. Space Force ground‑system contract and a 3:1 Q1 book‑to‑bill in satellites, with meaningful profitability expected in Q3–Q4.
• Management expects rapid scale in hypersonics and propulsion (guiding ~$400M in hypersonics revenue for 2026 and ~$700M for 2027), plus plans to begin LRIP for small jet engines this year and produce thousands of engines in 2027–2028, positioning these franchises as multi‑year growth drivers.
• Near‑term cash generation is pressured: Q1 used operating cash of $27.4M and free cash flow of $43.1M, DSOs rose to 130 days, and elevated CapEx (~$160M guidance) and working‑capital needs are expected as production ramps.
• Updated guidance targets full‑year 2026 revenue of $1.7–$1.76B and a company goal of a 100 basis point EBITDA‑margin improvement year‑over‑year for 2026 and 2027, but Q2 guidance is conservative due to mix, overhead ramp and timing of government funding.

Kratos Defense & Security Solutions Stock Up 3.7%

Shares of NASDAQ KTOS traded up $2.21 during mid-day trading on Wednesday, hitting $61.52. The company had a trading volume of 4,348,103 shares, compared to its average volume of 3,625,811. The company has a market capitalization of $11.53 billion, a PE ratio of 473.27 and a beta of 1.06. The firm has a 50-day simple moving average of $77.13 and a two-hundred day simple moving average of $84.59. The company has a current ratio of 4.06, a quick ratio of 3.46 and a debt-to-equity ratio of 0.05. Kratos Defense & Security Solutions has a one year low of $32.85 and a one year high of $134.00.

Insider Activity

In other Kratos Defense & Security Solutions news, Director Scot B. Jarvis sold 5,417 shares of the company's stock in a transaction on Thursday, April 16th. The shares were sold at an average price of $75.90, for a total transaction of $411,150.30. Following the sale, the director directly owned 75,123 shares of the company's stock, valued at approximately $5,701,835.70. This represents a 6.73% decrease in their ownership of the stock. The transaction was disclosed in a legal filing with the SEC, which is available through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, insider Stacey G. Rock sold 4,000 shares of the company's stock in a transaction on Tuesday, April 28th. The stock was sold at an average price of $61.03, for a total transaction of $244,120.00. Following the sale, the insider directly owned 17,897 shares in the company, valued at $1,092,253.91. This trade represents a 18.27% 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. In the last three months, insiders sold 173,027 shares of company stock valued at $13,871,640. 1.50% of the stock is owned by corporate insiders.

Hedge Funds Weigh In On Kratos Defense & Security Solutions

Institutional investors and hedge funds have recently modified their holdings of the business. Mcguire Capital Advisors Inc. acquired a new position in shares of Kratos Defense & Security Solutions in the fourth quarter valued at about $25,000. Kemnay Advisory Services Inc. acquired a new position in shares of Kratos Defense & Security Solutions in the fourth quarter valued at about $37,000. Parallel Advisors LLC grew its stake in shares of Kratos Defense & Security Solutions by 44.1% in the fourth quarter. Parallel Advisors LLC now owns 526 shares of the aerospace company's stock valued at $40,000 after acquiring an additional 161 shares in the last quarter. Rakuten Securities Inc. acquired a new position in shares of Kratos Defense & Security Solutions in the second quarter valued at about $31,000. Finally, Arax Advisory Partners grew its stake in shares of Kratos Defense & Security Solutions by 57.7% in the fourth quarter. Arax Advisory Partners now owns 724 shares of the aerospace company's stock valued at $55,000 after acquiring an additional 265 shares in the last quarter. 75.92% of the stock is currently owned by institutional investors and hedge funds.

Trending Headlines about Kratos Defense & Security Solutions

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

• Positive Sentiment: Q1 beat and raised FY26 guidance — Kratos reported $0.16 non‑GAAP EPS vs. $0.13 est. and $371.0M revenue vs. ~$345M est.; management raised FY26 revenue to $1.70–$1.76B and adjusted EBITDA to $170–$176M, which supports near‑term upside. Kratos Reports First Quarter 2026 Financial Results and Increases Fiscal FY26 Financial Guidance
• Positive Sentiment: Strong bookings, backlog and pipeline — management cited a 1.6:1 Q1 book‑to‑bill, record backlog (~$2B) and an expanded opportunity pipeline (~$14B), implying sustained revenue visibility beyond the quarter. Q1 2026 Earnings Call Transcript
• Positive Sentiment: Segment strength — Unmanned Systems posted ~30.9% organic growth and Government Solutions showed healthy organic gains, signaling product demand and diversification across defense programs. Kratos Reports First Quarter 2026 Financial Results
• Positive Sentiment: Analyst upgrades and institutional buying — Several firms raised price targets and multiple funds increased positions, which can support sentiment and liquidity. MarketBeat KTOS Coverage
• Neutral Sentiment: Insider sale disclosed — CFO sold 5,000 shares under a pre‑arranged Rule 10b5‑1 plan; routine but worth noting for governance/flow context. Insider Selling: CFO Sells 5,000 Shares
• Negative Sentiment: Near‑term guide mixed — Q2 revenue guidance ($400–$410M) was roughly in line to slightly below the Street (reports noted ~2.3% below one consensus), which could pressure near‑term expectations despite the raised full‑year view. Kratos Delivers Strong Q1 CY2026 Numbers
• Negative Sentiment: High valuation and recent pullback — KTOS trades with a very high P/E and has shown a YTD pullback; stretched multiples increase sensitivity to execution and guidance. Is It Time To Reassess Kratos After Pullback?

Analyst Ratings Changes

Several research firms recently weighed in on KTOS. Cantor Fitzgerald reissued an "overweight" rating and set a $115.00 price objective on shares of Kratos Defense & Security Solutions in a research note on Tuesday, February 24th. Citizens Jmp lifted their price objective on shares of Kratos Defense & Security Solutions from $105.00 to $125.00 and gave the stock a "market outperform" rating in a research note on Monday, January 12th. KeyCorp lifted their price objective on shares of Kratos Defense & Security Solutions from $90.00 to $130.00 and gave the stock an "overweight" rating in a research note on Wednesday, January 28th. BTIG Research lifted their price objective on shares of Kratos Defense & Security Solutions from $95.00 to $115.00 and gave the stock a "buy" rating in a research note on Tuesday, February 24th. Finally, Clear Str raised shares of Kratos Defense & Security Solutions to a "strong-buy" rating in a research note on Wednesday, April 29th. Three equities research analysts have rated the stock with a Strong Buy rating, fifteen have given a Buy rating and five have issued a Hold rating to the company. According to MarketBeat, Kratos Defense & Security Solutions has an average rating of "Moderate Buy" and an average target price of $98.28.

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.

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