Kratos Defense & Security Solutions: Assessing Valuation Following Major U.S. Navy Contract Win

Kratos Defense & Security Solutions is getting attention after landing a $175 million contract from the U.S. Navy to develop a sustainment program for its AN/SPY-1 radar systems. The deal highlights growing trust from military partners.

See our latest analysis for Kratos Defense & Security Solutions.

Kratos’s momentum has been nothing short of remarkable, driven not only by its latest Navy contract win but also by a string of strategic moves in unmanned systems and secure communications. The stock’s 52.7% share price return over the past month and a 303.4% total shareholder return in the last year spotlight growing investor confidence, even as the valuation stretches above sector averages. With project awards landing and defense priorities evolving, Kratos’s multi-year performance keeps building on real operational wins.

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But after such a staggering run-up and with analysts debating valuation, is Kratos still trading below its true worth or have investors already accounted for years of anticipated growth? Could there still be a buying window here?

Most Popular Narrative: 32.8% Overvalued

With Kratos Defense & Security Solutions trading at $98.55 and the most-followed narrative fair value at $74.21, there is a sharp divide between market price and what analysts think is realistic. This sets up big questions about how sustainable the premium really is.

Strategic wins on generational programs (e.g., Poseidon, MACH-TB, Prometheus, GEK), ongoing facility expansions, and deepening partnerships with primes and government agencies are creating a strong multi-year visibility into revenue and cash flow growth. As these large-scale awards transition into full-rate production, Kratos is set to leverage operational scale for improved net margin, increasing the company's earnings power and long-term intrinsic value.

Read the complete narrative.

Want to know the numbers powering this premium? The narrative’s valuation rests on aggressive profit expansion, sky-high future multiples, and bullish sales momentum. Find out which financial assumptions are behind the gap between analyst price targets and today’s soaring share price—see what’s really driving this fair value.

Result: Fair Value of $74.21 (OVERVALUED)

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

However, unexpected delays in contract awards or supply chain disruptions could challenge Kratos's growth narrative and put sustained earnings momentum at risk.

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

Build Your Own Kratos Defense & Security Solutions Narrative

If you see things differently or would rather dig into the data firsthand, you can shape your own narrative in just a few minutes, your way with Do it your way.

A good starting point is our analysis highlighting 2 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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