Is Now An Opportune Moment To Examine Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS)?

While Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) might not have the largest market cap around , it saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$20.82 and falling to the lows of US$16.93. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Kratos Defense & Security Solutions' current trading price of US$17.61 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Kratos Defense & Security Solutions’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Kratos Defense & Security Solutions

What Is Kratos Defense & Security Solutions Worth?

According to our valuation model, Kratos Defense & Security Solutions seems to be fairly priced at around 7.2% below our intrinsic value, which means if you buy Kratos Defense & Security Solutions today, you’d be paying a fair price for it. And if you believe that the stock is really worth $18.97, then there isn’t much room for the share price grow beyond what it’s currently trading. In addition to this, Kratos Defense & Security Solutions has a low beta, which suggests its share price is less volatile than the wider market.

What kind of growth will Kratos Defense & Security Solutions generate?

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. In Kratos Defense & Security Solutions' case, its revenues over the next few years are expected to grow by 31%, indicating a highly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? It seems like the market has already priced in KTOS’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on KTOS, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. At Simply Wall St, we found 1 warning sign for Kratos Defense & Security Solutions and we think they deserve your attention.

If you are no longer interested in Kratos Defense & Security Solutions, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.