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

Kratos Defense & Security Solutions (NASDAQ:KTOS) released its quarterly earnings data on Thursday. The aerospace company reported $0.24 earnings per share for the quarter, topping analysts’ consensus estimates of $0.21 by $0.03, FiscalAI reports. Kratos Defense & Security Solutions had a net margin of 2.03% and a return on equity of 3.07%. The firm had revenue of $471.80 million for the quarter, compared to analyst estimates of $471.40 million. During the same quarter in the prior year, the business earned $0.14 earnings per share. The business’s quarterly revenue was up 35.7% compared to the same quarter last year.

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 Performance

KTOS traded down $2.57 on Thursday, reaching $33.39. The stock had a trading volume of 9,462,021 shares, compared to its average volume of 4,377,760. Kratos Defense & Security Solutions has a 12-month low of $32.50 and a 12-month high of $134.00. The company has a current ratio of 5.54, a quick ratio of 4.99 and a debt-to-equity ratio of 0.04. The business’s 50-day moving average price is $43.85 and its two-hundred day moving average price is $63.03. The company has a market cap of $6.27 billion, a P/E ratio of 74.92 and a beta of 1.18.

Insider Buying and Selling at Kratos Defense & Security Solutions

In related news, SVP Marie Mendoza sold 1,000 shares of Kratos Defense & Security Solutions stock in a transaction dated Tuesday, September 15th. The stock was sold at an average price of $48.50, for a total value of $48,500.00. Following the completion of the transaction, the senior vice president owned 61,200 shares in the company, valued at $2,968,200. The trade was a 1.61% decrease in their position. The sale 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, Director Scot B. Jarvis sold 10,000 shares of Kratos Defense & Security Solutions stock in a transaction dated Tuesday, August 18th. The shares were sold at an average price of $63.50, for a total value of $635,000.00. Following the completion of the transaction, the director owned 65,123 shares of the company’s stock, valued at approximately $4,135,310.50. This represents a 13.31% decrease in their position. The disclosure for this sale is available in the SEC filing. Over the last 90 days, insiders sold 373,013 shares of company stock worth $23,340,582. 1.50% of the stock is currently owned by company insiders.

Analyst Upgrades and Downgrades

Several equities research analysts have weighed in on KTOS shares. Weiss Ratings reaffirmed a “sell (d+)” rating on shares of Kratos Defense & Security Solutions in a research report on Tuesday. BNP Paribas Exane raised Kratos Defense & Security Solutions from a “neutral” rating to an “outperform” rating in a report on Thursday, October 8th. Citizens Jmp lowered their target price on Kratos Defense & Security Solutions from $105.00 to $70.00 and set a “market outperform” rating on the stock in a research note on Monday, October 19th. Rothschild & Co Redburn initiated coverage on Kratos Defense & Security Solutions in a report on Tuesday, October 6th. They set a “buy” rating and a $70.00 target price on the stock. Finally, Jefferies Financial Group cut Kratos Defense & Security Solutions from a “buy” rating to a “negative” rating in a research report on Monday, October 19th. Three equities research analysts have rated the stock with a Strong Buy rating, twenty have assigned a Buy rating, one has assigned a Hold rating and two have given a Sell rating to the company. Based on data from MarketBeat, the company currently has a consensus rating of “Moderate Buy” and a consensus price target of $83.65.

Trending Headlines about Kratos Defense & Security Solutions

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

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.