Kratos Defense & Security Solutions (NASDAQ:KTOS) Shares Up 5.1% on Better-Than-Expected Earnings

Shares of Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) rose 5.1% during trading on Friday following a stronger than expected earnings report. The company traded as high as $35.31 and last traded at $35.10. 7,991,751 shares changed hands during mid-day 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. The company had revenue of $471.80 million during the quarter, compared to analyst estimates of $471.40 million. Kratos Defense & Security Solutions had a return on equity of 3.07% and a net margin of 2.03%. The firm’s revenue for the quarter was up 35.7% compared to the same quarter last year. During the same period in the prior year, the business posted $0.14 earnings per share.

Key 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

Analyst Upgrades and Downgrades

Several analysts recently issued reports on KTOS shares. BTIG Research reduced their price objective on shares of Kratos Defense & Security Solutions from $104.00 to $65.00 and set a “buy” rating on the stock in a report on Friday. Royal Bank Of Canada lowered their target price on shares of Kratos Defense & Security Solutions from $80.00 to $55.00 and set an “outperform” rating for the company in a research note on Wednesday, October 28th. BNP Paribas Exane raised shares of Kratos Defense & Security Solutions from a “neutral” rating to an “outperform” rating in a research note on Thursday, October 8th. Stifel Nicolaus dropped their price target on shares of Kratos Defense & Security Solutions from $134.00 to $115.00 and set a “buy” rating for the company in a research report on Thursday, August 6th. Finally, Piper Sandler reduced their price target 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. Three research analysts have rated the stock with a Strong Buy rating, twenty have given a Buy rating, one has issued a Hold rating and two have issued a Sell rating to the company’s stock. According to MarketBeat.com, Kratos Defense & Security Solutions currently has a consensus rating of “Moderate Buy” and an average target price of $81.70.

Insider Buying and Selling at Kratos Defense & Security Solutions

In other news, insider Steven S. Fendley sold 7,000 shares of the firm’s stock in a transaction on Monday, August 24th. The stock was sold at an average price of $56.16, for a total transaction of $393,120.00. Following the completion of the transaction, the insider directly owned 288,111 shares in the company, valued at $16,180,313.76. This trade represents a 2.37% decrease in their ownership of the stock. The transaction was disclosed in a filing with the SEC, which is available at the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CEO Eric M. Demarco sold 300,000 shares of Kratos Defense & Security Solutions stock in a transaction on Friday, August 14th. The shares were sold at an average price of $64.33, for a total value of $19,299,000.00. Following the completion of the sale, the chief executive officer directly owned 761,632 shares of the company’s stock, valued at $48,995,786.56. The trade was a 28.26% 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 90 days, insiders sold 373,013 shares of company stock valued at $23,340,582. Corporate insiders own 1.50% of the company’s stock.

Hedge Funds Weigh In On Kratos Defense & Security Solutions

Several institutional investors have recently bought and sold shares of the company. Bank of New York Mellon Corp lifted its position in shares of Kratos Defense & Security Solutions by 12.2% during the first quarter. Bank of New York Mellon Corp now owns 1,515,997 shares of the aerospace company’s stock worth $106,893,000 after purchasing an additional 164,607 shares in the last quarter. B&D White Capital Company LLC boosted its stake in shares of Kratos Defense & Security Solutions by 21,357.3% in the third quarter. B&D White Capital Company LLC now owns 1,823,870 shares of the aerospace company’s stock valued at $77,861,000 after purchasing an additional 1,815,370 shares during the period. Principal Financial Group Inc. boosted its stake in shares of Kratos Defense & Security Solutions by 48.0% in the first quarter. Principal Financial Group Inc. now owns 1,056,872 shares of the aerospace company’s stock valued at $74,520,000 after purchasing an additional 342,789 shares during the period. Sumitomo Mitsui Trust Group Inc. grew its holdings in shares of Kratos Defense & Security Solutions by 16.7% in the third quarter. Sumitomo Mitsui Trust Group Inc. now owns 1,664,120 shares of the aerospace company’s stock valued at $71,041,000 after purchasing an additional 238,611 shares in the last quarter. Finally, Bamco Inc. NY acquired a new position in shares of Kratos Defense & Security Solutions in the second quarter valued at approximately $53,746,000. 75.92% of the stock is owned by institutional investors and hedge funds.

Kratos Defense & Security Solutions Stock Up 5.1%

The business’s fifty day moving average is $43.85 and its two-hundred day moving average is $63.03. The stock has a market cap of $6.59 billion, a price-to-earnings ratio of 206.47 and a beta of 1.18. The company has a quick ratio of 4.99, a current ratio of 5.54 and a debt-to-equity ratio of 0.04.

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.