Kratos Defense & Security Solutions (NASDAQ:KTOS) Stock Jumps 5.1% Following Better-Than-Expected Earnings

Key Points

• Kratos shares rose 5.1% after quarterly adjusted earnings of $0.24 per share beat the $0.21 consensus; revenue increased 35.7% year over year to $471.8 million, roughly in line with estimates.
• Demand indicators were strong, with $1.037 billion in bookings, a 2.2-to-1 book-to-bill ratio and a record $2.65 billion backlog. Management also raised its 2026 outlook.
• Despite rapid growth, the company reported negative free cash flow and a GAAP operating loss, raising questions about converting growth into cash and sustained profitability.

Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS - Get Free Report) shot up 5.1% during mid-day trading on Friday after the company announced better than expected quarterly earnings. The company traded as high as $35.31 and last traded at $35.10. 7,991,751 shares changed hands during trading, an increase of 82% from the average session volume of 4,399,125 shares. The stock had previously closed at $33.39.

The aerospace company reported $0.24 earnings per share for the quarter, topping the consensus estimate of $0.21 by $0.03. Kratos Defense & Security Solutions had a return on equity of 3.07% and a net margin of 2.03%. The company had revenue of $471.80 million for the quarter, compared to the consensus estimate of $471.40 million. During the same period last year, the firm earned $0.14 EPS. The firm's revenue for the quarter was up 35.7% compared to the same quarter last year.

More Kratos Defense & Security Solutions News

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

• Positive Sentiment: Third-quarter adjusted earnings were $0.24 per share, topping the $0.21 consensus and rising from $0.14 a year earlier. Revenue grew 35.7% to $471.8 million, approximately in line with estimates. Kratos Defense Q3 Earnings Outpace Estimates, Revenues Increase Y/Y
• Positive Sentiment: Demand indicators were strong: the company reported a 2.2-to-1 book-to-bill ratio, $1.037 billion in bookings, and a record $2.65 billion backlog—supporting future revenue visibility. Kratos Reports Third Quarter 2026 Financial Results
• Positive Sentiment: Management raised its 2026 outlook, and fourth-quarter revenue guidance extends the growth story, with the top of the $480 million–$510 million range above analyst expectations.
• Neutral Sentiment: Options trading was unusually active, with call volume 44% above its average. This may reflect increased investor interest but does not establish the direction of future trading.
• Negative Sentiment: Despite higher adjusted EBITDA, Kratos reported negative free cash flow and a GAAP operating loss, raising questions about how quickly growth converts into cash and sustained profitability. Kratos Sales Up 36%, Free Cash Flow Negative
• Negative Sentiment: BTIG cut its price target to $65 from $104, though it maintained a Buy rating. The reduction signals a more cautious valuation view even as the analyst remains positive. BTIG Research ratings

Wall Street Analysts Forecast Growth

A number of brokerages have recently commented on KTOS. Piper Sandler dropped their price objective on shares of Kratos Defense & Security Solutions from $75.00 to $61.00 and set an "overweight" rating on the stock in a research note on Friday, October 23rd. Oppenheimer started coverage on shares of Kratos Defense & Security Solutions in a research note on Thursday, October 22nd. They issued an "outperform" rating and a $50.00 target price for the company. Canaccord Genuity Group increased their price target on shares of Kratos Defense & Security Solutions from $130.00 to $135.00 and gave the stock a "buy" rating in a report on Wednesday, August 5th. Weiss Ratings reissued a "sell (d+)" rating on shares of Kratos Defense & Security Solutions in a report on Tuesday. Finally, Citigroup restated a "market outperform" rating on shares of Kratos Defense & Security Solutions in a research report on Monday, October 19th. Three 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 assigned a Sell rating to the company. According to MarketBeat.com, Kratos Defense & Security Solutions currently has an average rating of "Moderate Buy" and a consensus price target of $81.70.

Insiders Place Their Bets

In related news, insider Steven Fendley sold 7,000 shares of the company's stock in a transaction dated Monday, August 24th. The shares were sold at an average price of $56.16, for a total transaction of $393,120.00. Following the completion of the transaction, the insider owned 288,111 shares in the company, valued at $16,180,313.76. This represents a 2.37% decrease in their position. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is available at the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, SVP Marie Mendoza sold 1,000 shares of the firm's stock in a transaction dated Tuesday, September 15th. The shares were sold at an average price of $48.50, for a total transaction of $48,500.00. Following the completion of the transaction, the senior vice president directly owned 61,200 shares in the company, valued at $2,968,200. This represents a 1.61% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Over the last quarter, insiders have sold 373,013 shares of company stock valued at $23,340,582. 1.50% of the stock is owned by company insiders.

Institutional Trading of Kratos Defense & Security Solutions

Several large investors have recently made changes to their positions in KTOS. Versant Capital Management Inc raised its stake in Kratos Defense & Security Solutions by 61.9% during the second quarter. Versant Capital Management Inc now owns 696 shares of the aerospace company's stock worth $35,000 after purchasing an additional 266 shares during the period. Vision Retirement LLC boosted its holdings in Kratos Defense & Security Solutions by 288.2% in the 1st quarter. Vision Retirement LLC now owns 427 shares of the aerospace company's stock valued at $30,000 after purchasing an additional 317 shares during the last quarter. Ranch Capital Advisors Inc. boosted its holdings in Kratos Defense & Security Solutions by 5.1% in the 1st quarter. Ranch Capital Advisors Inc. now owns 6,553 shares of the aerospace company's stock valued at $462,000 after purchasing an additional 318 shares during the last quarter. Provenance Wealth Advisors LLC boosted its holdings in Kratos Defense & Security Solutions by 128.9% in the 3rd quarter. Provenance Wealth Advisors LLC now owns 744 shares of the aerospace company's stock valued at $32,000 after purchasing an additional 419 shares during the last quarter. Finally, IMG Wealth Management Inc. grew its stake in shares of Kratos Defense & Security Solutions by 427.0% in the 1st quarter. IMG Wealth Management Inc. now owns 527 shares of the aerospace company's stock valued at $37,000 after buying an additional 427 shares during the period. 75.92% of the stock is currently owned by hedge funds and other institutional investors.

Kratos Defense & Security Solutions Stock Performance

The firm's 50 day moving average price is $43.85 and its two-hundred day moving average price is $63.03. The firm has a market cap of $6.59 billion, a PE ratio of 206.47 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.

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.

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