Kratos Defense & Security Solutions (NASDAQ:KTOS) and Ducommun (NYSE:DCO) Critical Comparison

Kratos Defense & Security Solutions (NASDAQ:KTOS) and Ducommun (NYSE:DCO) are both aerospace companies, but which is the better stock? We will compare the two businesses based on the strength of their valuation, profitability, dividends, analyst recommendations, risk, earnings and institutional ownership.

Volatility & Risk

Kratos Defense & Security Solutions has a beta of 1.11, indicating that its share price is 11% more volatile than the S&P 500. Comparatively, Ducommun has a beta of 1.38, indicating that its share price is 38% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings for Kratos Defense & Security Solutions and Ducommun, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kratos Defense & Security Solutions	0	6	12	1	2.74
Ducommun	1	1	5	0	2.57

Kratos Defense & Security Solutions presently has a consensus price target of $82.06, indicating a potential upside of 8.74%. Ducommun has a consensus price target of $97.50, indicating a potential upside of 7.87%. Given Kratos Defense & Security Solutions’ stronger consensus rating and higher probable upside, equities analysts plainly believe Kratos Defense & Security Solutions is more favorable than Ducommun.

Valuation and Earnings

This table compares Kratos Defense & Security Solutions and Ducommun”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kratos Defense & Security Solutions	$1.28 billion	9.92	$16.30 million	$0.13	580.50
Ducommun	$806.22 million	1.68	$31.50 million	($2.34)	-38.63

Ducommun has lower revenue, but higher earnings than Kratos Defense & Security Solutions. Ducommun is trading at a lower price-to-earnings ratio than Kratos Defense & Security Solutions, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

75.9% of Kratos Defense & Security Solutions shares are owned by institutional investors. Comparatively, 92.2% of Ducommun shares are owned by institutional investors. 2.4% of Kratos Defense & Security Solutions shares are owned by company insiders. Comparatively, 8.9% of Ducommun shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Kratos Defense & Security Solutions and Ducommun’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Kratos Defense & Security Solutions	1.20%	3.10%	2.22%
Ducommun	5.03%	7.61%	4.62%

Summary

Kratos Defense & Security Solutions beats Ducommun on 8 of the 15 factors compared between the two stocks.

About Kratos Defense & Security Solutions

Kratos Defense & Security Solutions, Inc. engages in the provision of mission critical products, services and solutions for United States national security priorities. It operates through the Kratos Government Solutions (KGS) and Unmanned Systems (US) segments. The KGS segment consists of an aggregation of KGS operating segments, including microwave electronic products, space, satellite and cyber, training solutions. The US segment refers to the unmanned aerial, unmanned ground, unmanned seaborne and related command, control and communications system businesses. The company was founded on December 19, 1994, and is headquartered in Round Rock, TX.

About Ducommun

Ducommun Incorporated provides engineering and manufacturing services for products and applications used primarily in the aerospace and defense, industrial, medical, and other industries in the United States. The company operates through two segments, Electronic Systems and Structural Systems. The Electronic Systems segment provides cable assemblies and interconnect systems; printed circuit board assemblies; electronic, electromechanical, and mechanical components and assemblies, as well as lightning diversion systems; and radar enclosures, aircraft avionics racks, shipboard communications and control enclosures, printed circuit board assemblies, cable assemblies, wire harnesses, interconnect systems, lightning diversion strips, surge suppressors, conformal shields, and other assemblies. The segment also supplies engineered products, including illuminated pushbutton switches and panels for aviation and test systems; microwave and millimeter switches and filters for radio frequency systems and test instrumentation; and motors and resolvers for motion control. In addition, this segment provides engineering expertise for aerospace system design, development, integration, and testing. The Structural Systems segment designs, engineers, and manufactures contoured aluminum, titanium, and Inconel aero structure components; structural assembly products, such as winglets, engine components, and fuselage structural panels; aerodynamic systems; and metal and composite bonded structures and assemblies comprising aircraft wing spoilers, large fuselage skins, rotor blades on rotary-wing aircraft and components, flight control surfaces, engine components, ammunition handling systems, and magnetic seals. It serves commercial aircraft, military fixed-wing aircraft, military and commercial rotary-wing aircraft, and space programs, as well as industrial, medical, and other end-use markets. The company was founded in 1849 and is headquartered in Santa Ana, California.