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

Key Points

• Kratos beat quarterly expectations: EPS was $0.21 versus the $0.14 consensus, while revenue rose 30.5% year over year to $458.8 million, exceeding estimates of $410.4 million. Management raised its 2026 organic revenue-growth outlook to 19%-23%.
• Hypersonics and propulsion are major growth drivers: Hypersonics revenue is projected to reach at least $700 million by 2027, while the company is preparing for demand from thousands of turbojet engines for low-cost cruise missiles.
• Growth requires substantial investment: Kratos reported negative operating and free cash flow in the quarter and expects 2026 investment of approximately $250 million-$270 million, while currency movements may reduce full-year EBITDA by $5 million-$7 million.

Kratos Defense & Security Solutions (NASDAQ:KTOS - Get Free Report) released its quarterly earnings results on Tuesday. The aerospace company reported $0.21 earnings per share for the quarter, topping analysts' consensus estimates of $0.14 by $0.07, FiscalAI reports. The business had revenue of $458.80 million during the quarter, compared to the consensus estimate of $410.38 million. Kratos Defense & Security Solutions had a net margin of 2.08% and a return on equity of 2.82%. The business's quarterly revenue was up 30.5% compared to the same quarter last year. During the same quarter last year, the company earned $0.11 earnings per share.

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

NASDAQ KTOS traded up $2.66 during trading hours on Tuesday, reaching $51.87. The company's stock had a trading volume of 6,320,061 shares, compared to its average volume of 4,464,881. The company has a current ratio of 5.63, a quick ratio of 5.08 and a debt-to-equity ratio of 0.04. The business has a 50-day simple moving average of $52.63 and a 200 day simple moving average of $72.13. Kratos Defense & Security Solutions has a 52 week low of $43.09 and a 52 week high of $134.00. The stock has a market cap of $9.73 billion, a PE ratio of 305.12 and a beta of 1.08.

Wall Street Analysts Forecast Growth

A number of research analysts have commented on the stock. Royal Bank Of Canada reduced their price objective on shares of Kratos Defense & Security Solutions from $100.00 to $80.00 and set an "outperform" rating on the stock in a research note on Thursday, May 7th. Cantor Fitzgerald dropped their target price on shares of Kratos Defense & Security Solutions from $115.00 to $100.00 and set an "overweight" rating for the company in a research report on Tuesday. Piper Sandler cut their target price on shares of Kratos Defense & Security Solutions from $99.00 to $75.00 and set a "neutral" rating on the stock in a research note on Thursday, May 7th. JPMorgan Chase & Co. upgraded shares of Kratos Defense & Security Solutions from a "neutral" rating to an "overweight" rating and cut their target price for the company from $99.00 to $82.00 in a research note on Friday, June 12th. Finally, BTIG Research reduced their price target on shares of Kratos Defense & Security Solutions from $115.00 to $100.00 and set a "buy" rating on the stock in a research report on Thursday, May 7th. Three analysts have rated the stock with a Strong Buy rating, sixteen have assigned a Buy rating and four have issued a Hold rating to the company. According to MarketBeat, the company currently has a consensus rating of "Moderate Buy" and an average price target of $100.41.

Insider Activity at Kratos Defense & Security Solutions

In other news, CFO Deanna H. Lund sold 5,000 shares of the stock in a transaction that occurred 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 sale, the chief financial officer directly owned 290,161 shares in the company, valued at approximately $18,494,862.14. This represents a 1.69% decrease in their position. The sale was disclosed in a document filed with the Securities & Exchange Commission, which can be accessed through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, insider Phillip D. Carrai sold 6,500 shares of the firm's stock in a transaction that occurred on Friday, May 15th. The stock was sold at an average price of $52.13, for a total value of $338,845.00. Following the completion of the sale, the insider directly owned 221,550 shares in the company, valued at approximately $11,549,401.50. This trade represents a 2.85% decrease in their position. 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 139,036 shares of company stock valued at $7,799,667. 1.50% of the stock is owned by insiders.

Institutional Investors Weigh In On Kratos Defense & Security Solutions

Hedge funds have recently added to or reduced their stakes in the stock. Mcguire Capital Advisors Inc. bought a new position in shares of Kratos Defense & Security Solutions during the fourth quarter worth about $25,000. Corient Private Wealth LLC boosted its stake in Kratos Defense & Security Solutions by 7,701.6% during the 4th quarter. Corient Private Wealth LLC now owns 1,593,549 shares of the aerospace company's stock valued at $120,966,000 after purchasing an additional 1,573,123 shares during the period. State of Tennessee Department of Treasury grew its position in Kratos Defense & Security Solutions by 5.2% in the 4th quarter. State of Tennessee Department of Treasury now owns 71,408 shares of the aerospace company's stock worth $5,421,000 after purchasing an additional 3,539 shares during the last quarter. Mackenzie Financial Corp increased its stake in shares of Kratos Defense & Security Solutions by 9.5% in the fourth quarter. Mackenzie Financial Corp now owns 12,628 shares of the aerospace company's stock valued at $958,000 after purchasing an additional 1,091 shares during the period. Finally, NewEdge Advisors LLC raised its holdings in shares of Kratos Defense & Security Solutions by 5.8% during the fourth quarter. NewEdge Advisors LLC now owns 7,572 shares of the aerospace company's stock valued at $575,000 after buying an additional 416 shares during the last quarter. 75.92% of the stock is currently owned by institutional investors.

Trending Headlines about Kratos Defense & Security Solutions

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

• Positive Sentiment: Kratos beat quarterly estimates. Second-quarter earnings were $0.21 per share, above the $0.14 consensus estimate, while revenue of $458.8 million exceeded expectations of $410.4 million. Kratos Second-Quarter Earnings Press Release
• Positive Sentiment: Revenue growth remained strong. Second-quarter revenue increased 30.5% year over year to $458.8 million, including 19.1% organic growth, reinforcing investor expectations for continued demand across Kratos’ aerospace, defense and drone-related businesses. Kratos Reports Second-Quarter 2026 Financial Results
• Positive Sentiment: Full-year revenue guidance was above consensus. Kratos projected fiscal 2026 revenue of approximately $1.8 billion, compared with analyst expectations of about $1.7 billion. Third-quarter revenue guidance of $460 million to $480 million also implies a midpoint modestly above the $462.8 million consensus estimate.
• Positive Sentiment: Analyst sentiment remains bullish. Cantor Fitzgerald maintained an “overweight” rating and indicated substantial potential upside despite lowering its price target from $115 to $100. Cantor Fitzgerald Kratos Price Target Update
• Negative Sentiment: The price-target reduction is a modest caution. Although Cantor remains positive on KTOS, lowering its target suggests analysts see some near-term valuation or execution risks after the stock’s earlier rally.

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.

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.

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