Is It Time To Consider Buying Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS)?

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Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS), which is in the aerospace & defense business, and is based in United States, received a lot of attention from a substantial price increase on the NASDAQGS over the last few months. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s take a look at Kratos Defense & Security Solutions’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Kratos Defense & Security Solutions

What is Kratos Defense & Security Solutions worth?

According to my valuation model, the stock is currently overvalued by about 31.67%, trading at US$22.18 compared to my intrinsic value of $16.84. Not the best news for investors looking to buy! But, is there another opportunity to buy low in the future? Since Kratos Defense & Security Solutions’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

Can we expect growth from Kratos Defense & Security Solutions?

NasdaqGS:KTOS Past and Future Earnings, May 29th 2019
NasdaqGS:KTOS Past and Future Earnings, May 29th 2019

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to more than double over the next couple of years, the future seems bright for Kratos Defense & Security Solutions. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? KTOS’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe KTOS should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on KTOS for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for KTOS, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Kratos Defense & Security Solutions. You can find everything you need to know about Kratos Defense & Security Solutions in the latest infographic research report. If you are no longer interested in Kratos Defense & Security Solutions, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.