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

Kratos Defense & Security Solutions (NASDAQ:KTOS) announced its quarterly earnings data on Thursday. The aerospace company reported $0.24 EPS for the quarter, beating the consensus estimate of $0.21 by $0.03, FiscalAI reports. 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 quarter in the prior year, the company posted $0.14 EPS. Kratos Defense & Security Solutions’s quarterly revenue 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 Down 7.1%

Kratos Defense & Security Solutions stock traded down $2.57 during midday trading on Thursday, hitting $33.39. 9,462,021 shares of the company’s stock were exchanged, compared to its average volume of 4,377,760. 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 has a 12 month low of $32.50 and a 12 month high of $134.00. The firm has a 50-day moving average of $43.85 and a two-hundred day moving average of $63.03. The company has a market cap of $6.27 billion, a PE ratio of 74.92 and a beta of 1.18.

Insider Buying and Selling at Kratos Defense & Security Solutions

In other news, insider Steven Fendley sold 7,000 shares of the stock in a transaction that occurred on Monday, August 24th. The shares were sold at an average price of $56.16, for a total transaction of $393,120.00. Following the transaction, the insider directly owned 288,111 shares in the company, valued at approximately $16,180,313.76. This trade represents a 2.37% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is accessible through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, insider Phillip Carrai sold 26,500 shares of Kratos Defense & Security Solutions stock in a transaction that occurred on Monday, August 17th. The shares were sold at an average price of $63.25, for a total transaction of $1,676,125.00. Following the transaction, the insider directly owned 182,084 shares in the company, valued at approximately $11,516,813. The trade was a 12.70% 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. In the last ninety days, insiders have sold 373,013 shares of company stock worth $23,340,582. 1.50% of the stock is currently owned by company 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

Wall Street Analyst Weigh In

KTOS has been the topic of several recent analyst reports. Weiss Ratings reaffirmed a “sell (d+)” rating on shares of Kratos Defense & Security Solutions in a research note on Tuesday. Cantor Fitzgerald lowered their price objective 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, August 4th. Guggenheim assumed coverage on shares of Kratos Defense & Security Solutions in a research note on Monday, September 14th. They issued a “buy” rating and a $74.00 target price on the stock. Canaccord Genuity Group raised their target price on shares of Kratos Defense & Security Solutions from $130.00 to $135.00 and gave the stock a “buy” rating in a research report on Wednesday, August 5th. Finally, BTIG Research lifted their price target on shares of Kratos Defense & Security Solutions from $100.00 to $104.00 and gave the company a “buy” rating in a research note on Wednesday, August 5th. Three equities research analysts have rated the stock with a Strong Buy rating, twenty have issued a Buy rating, one has issued a Hold rating and two have assigned a Sell rating to the company’s stock. According to data from MarketBeat.com, the stock has a consensus rating of “Moderate Buy” and an average price target of $83.65.

About Kratos Defense & Security Solutions

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.