Kratos Defense & Security Solutions (NASDAQ:KTOS) shareholder returns have been favorable, earning 48% in 1 year

Passive investing in index funds can generate returns that roughly match the overall market. But you can significantly boost your returns by picking above-average stocks. For example, the Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) share price is up 48% in the last 1 year, clearly besting the market return of around 24% (not including dividends). If it can keep that out-performance up over the long term, investors will do very well! On the other hand, longer term shareholders have had a tougher run, with the stock falling 24% in three years.

The past week has proven to be lucrative for Kratos Defense & Security Solutions investors, so let's see if fundamentals drove the company's one-year performance.

See our latest analysis for Kratos Defense & Security Solutions

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Kratos Defense & Security Solutions was able to grow EPS by 97% in the last twelve months. We note, however, that extraordinary items have impacted earnings. It's fair to say that the share price gain of 48% did not keep pace with the EPS growth. So it seems like the market has cooled on Kratos Defense & Security Solutions, despite the growth. Interesting.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

We know that Kratos Defense & Security Solutions has improved its bottom line lately, but is it going to grow revenue? You could check out this free report showing analyst revenue forecasts.

A Different Perspective

It's nice to see that Kratos Defense & Security Solutions shareholders have received a total shareholder return of 48% over the last year. Notably the five-year annualised TSR loss of 1.8% per year compares very unfavourably with the recent share price performance. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. It's always interesting to track share price performance over the longer term. But to understand Kratos Defense & Security Solutions better, we need to consider many other factors. Even so, be aware that Kratos Defense & Security Solutions is showing 2 warning signs in our investment analysis , you should know about...

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.

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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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com