A Valuation Check on Kratos Defense & Security Solutions (KTOS) Following Major Facility Expansions in Jerusalem and Michigan

Kratos Defense & Security Solutions (KTOS) is making headlines after announcing the relocation of its Microwave Electronics Division to a state-of-the-art facility in Jerusalem. This move, along with a new Michigan propulsion plant, highlights the company’s effort to keep pace with rising global defense demand.

See our latest analysis for Kratos Defense & Security Solutions.

After these expansion milestones, Kratos Defense & Security Solutions continues to command attention with momentum that is tough to ignore. While the share price has pulled back 15.5% over the past month, this comes in the context of an incredible year-to-date share price return of 166%, and a one-year total shareholder return of 188%. This underscores just how strongly sentiment has shifted in response to Kratos’ bold growth initiatives.

If you want to see which other defense names are making major strides, take the next step and explore See the full list for free.

With shares now trading at a significant discount to analyst targets and the company forecasting double-digit revenue growth, investors must ask: is Kratos undervalued after its recent pullback, or is the market simply anticipating further gains?

Most Popular Narrative: 29.8% Undervalued

Kratos Defense & Security Solutions is trading well below the consensus fair value in the most widely followed narrative, potentially signaling room for upside if expectations are met. This narrative draws on a blend of recent contract wins, sector tailwinds, and company-specific momentum to outline what could drive share price gains ahead.

Multi-domain modernization (integrated land, sea, air, space, and cyber operations) underpins recurring demand for flexible, software-defined, and integrated platforms such as those in Kratos' OpenSpace, satellite communications, and hypersonic franchises. This diversification positions Kratos for increased earnings stability, margin expansion, and long-term EPS growth as higher-value, proprietary solutions take a larger share of the product mix.

Read the complete narrative.

Want to know what’s fueling such a bold fair value call? The narrative hinges on aggressive assumptions, including rocketing future earnings and a historically high profit multiple. The analyst crowd is betting on ambitious growth, improved margins, and a premium for industry leadership. Can record-breaking projections be realized? See the financial playbook inside the full narrative.

Result: Fair Value of $100 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, investors should be mindful that delayed government contracts or unexpected supply chain bottlenecks could challenge this optimistic outlook and introduce meaningful volatility.

Find out about the key risks to this Kratos Defense & Security Solutions narrative.

Another View: Multiples Signal Caution

Taking a look through a different lens, Kratos trades at a price-to-sales ratio of 9.2x, which is well above both its industry average at 2.9x and its peer group at 2.8x. The fair ratio here is 2.7x. This suggests that the current pricing builds in high expectations, and any stumble could lead to a sharp revaluation. Could the market be looking too far ahead?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Kratos Defense & Security Solutions Narrative

If the current story does not quite fit your perspective or you want to dig deeper, you can analyze the latest figures and craft a new narrative for yourself in just a few minutes. Do it your way

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Kratos Defense & Security Solutions.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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