NasdaqGS:KTOS

Stock Analysis Report

Kratos Defense & Security Solutions

Executive Summary

Kratos Defense & Security Solutions, Inc.

Rewards

Trading at 23.9% below its fair value

Earnings are forecast to grow 49.41% per year

Became profitable this year

Risk Analysis

Interest payments are not well covered by earnings



Snowflake Analysis

Reasonable growth potential with acceptable track record.


Similar Companies

Share Price & News

How has Kratos Defense & Security Solutions's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: KTOS has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

3.6%

KTOS

-0.1%

US Aerospace & Defense

1.5%

US Market


1 Year Return

20.5%

KTOS

25.8%

US Aerospace & Defense

20.1%

US Market

Return vs Industry: KTOS underperformed the US Aerospace & Defense industry which returned 25.8% over the past year.

Return vs Market: KTOS matched the US Market which returned 20.1% over the past year.


Shareholder returns

KTOSIndustryMarket
7 Day3.6%-0.1%1.5%
30 Day3.4%1.6%1.4%
90 Day5.0%6.1%8.7%
1 Year20.5%20.5%28.1%25.8%22.7%20.1%
3 Year145.1%145.1%54.6%46.4%50.1%40.5%
5 Year246.1%246.1%91.9%73.7%73.1%54.1%

Price Volatility Vs. Market

How volatile is Kratos Defense & Security Solutions's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Kratos Defense & Security Solutions undervalued compared to its fair value and its price relative to the market?

23.9%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: KTOS ($20.42) is trading below our estimate of fair value ($26.82)

Significantly Below Fair Value: KTOS is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: KTOS is poor value based on its PE Ratio (174.8x) compared to the Aerospace & Defense industry average (20.7x).

PE vs Market: KTOS is poor value based on its PE Ratio (174.8x) compared to the US market (18.4x).


Price to Earnings Growth Ratio

PEG Ratio: KTOS is poor value based on its PEG Ratio (3.5x)


Price to Book Ratio

PB vs Industry: KTOS is overvalued based on its PB Ratio (3.8x) compared to the US Aerospace & Defense industry average (2.8x).


Next Steps

Future Growth

How is Kratos Defense & Security Solutions forecast to perform in the next 1 to 3 years based on estimates from 8 analysts?

49.4%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: KTOS's forecast earnings growth (49.4% per year) is above the savings rate (1.7%).

Earnings vs Market: KTOS's earnings (49.4% per year) are forecast to grow faster than the US market (14.5% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: KTOS's revenue (13.2% per year) is forecast to grow faster than the US market (7.6% per year).

High Growth Revenue: KTOS's revenue (13.2% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: KTOS's Return on Equity is forecast to be low in 3 years time (10.4%).


Next Steps

Past Performance

How has Kratos Defense & Security Solutions performed over the past 5 years?

36.8%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: KTOS has high quality earnings.

Growing Profit Margin: KTOS became profitable in the past.


Past Earnings Growth Analysis

Earnings Trend: KTOS has become profitable over the past 5 years, growing earnings by 36.8% per year.

Accelerating Growth: KTOS has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: KTOS has become profitable in the last year, making it difficult to compare its past year earnings growth to the Aerospace & Defense industry (10.8%).


Return on Equity

High ROE: KTOS's Return on Equity (2.2%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Kratos Defense & Security Solutions's financial position?


Financial Position Analysis

Short Term Liabilities: KTOS's short term assets ($515.6M) exceed its short term liabilities ($181.5M).

Long Term Liabilities: KTOS's short term assets ($515.6M) exceed its long term liabilities ($414.6M).


Debt to Equity History and Analysis

Debt Level: KTOS's debt to equity ratio (50.6%) is considered high.

Reducing Debt: KTOS's debt to equity ratio has reduced from 282.6% to 50.6% over the past 5 years.


Balance Sheet

Inventory Level: KTOS has a low level of unsold assets or inventory.

Debt Coverage by Assets: KTOS's debt is covered by short term assets (assets are 1.7x debt).


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: KTOS is profitable, therefore cash runway is not a concern.

Forecast Cash Runway: KTOS is profitable, therefore cash runway is not a concern.


Next Steps

Dividend

What is Kratos Defense & Security Solutions's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

companyn/amarketbottom25%1.4%markettop25%3.7%industryaverage1.7%forecastin3Years0%

Current dividend yield vs market & industry

Notable Dividend: Unable to evaluate KTOS's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate KTOS's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if KTOS's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if KTOS's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of KTOS's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

4.5yrs

Average management tenure


CEO

Eric DeMarco (55yo)

15.8yrs

Tenure

US$5,514,184

Compensation

Mr. Eric M. DeMarco has been the Chief Executive Officer of Kratos Defense & Security Solutions, Inc. (alternatively, Wireless Facilities Inc.) since April 1, 2004 and as its President since November 24, 2 ...


CEO Compensation Analysis

Compensation vs Market: Eric's total compensation ($USD5.51M) is above average for companies of similar size in the US market ($USD3.76M).

Compensation vs Earnings: Eric's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Eric DeMarco
CEO, President & Director15.8yrsUS$5.51m0.54% $11.7m
Deanna Lund
Executive VP & CFO15.8yrsUS$2.53m0.26% $5.7m
Phillip Carrai
President of Space0.3yrsUS$1.88m0.14% $2.9m
Yonah Adelman
President of Microwave Electronics Division4.5yrsUS$951.70k0.043% $922.9k
Maria de Burgreen
VP & Corporate Controller3.8yrsno data0.0063% $135.6k
Kevin Walden
Chief Information Officer3.2yrsno datano data
Marie Mendoza
VP, General Counsel & Secretary4.2yrsno data0.010% $224.6k
David Carter
President of Defense & Rocket Support Services Division12.2yrsUS$503.17k0.070% $1.5m
Jennifer Price
Senior Vice President of Engineering Services - Madison Research0yrsno datano data
Thomas Mills
President of C5ISR Modular Systems Division6.5yrsno data0.025% $543.4k

4.5yrs

Average Tenure

56yo

Average Age

Experienced Management: KTOS's management team is considered experienced (4.5 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Eric DeMarco
CEO, President & Director15.8yrsUS$5.51m0.54% $11.7m
Scot Jarvis
Independent Director23yrsUS$192.00k0.099% $2.1m
Scott Anderson
Independent Director22.9yrsUS$186.00k0.10% $2.2m
William Hoglund
Independent Chairman10.7yrsUS$213.00k0.38% $8.2m
Samuel Liberatore
Independent Director11.1yrsUS$171.00k0.0012% $25.6k
Jane Judd
Independent Director9.1yrsUS$177.00k0.028% $618.0k
Amy Zegart
Independent Director5.4yrsUS$181.00kno data

11.1yrs

Average Tenure

60yo

Average Age

Experienced Board: KTOS's board of directors are seasoned and experienced ( 11.1 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: KTOS insiders have only sold shares in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Kratos Defense & Security Solutions, Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Kratos Defense & Security Solutions, Inc.
  • Ticker: KTOS
  • Exchange: NasdaqGS
  • Founded: 1994
  • Industry: Aerospace and Defense
  • Sector: Capital Goods
  • Market Cap: US$2.170b
  • Shares outstanding: 106.27m
  • Website: https://www.kratosdefense.com

Number of Employees


Location

  • Kratos Defense & Security Solutions, Inc.
  • 10680 Treena Street
  • Suite 600
  • San Diego
  • California
  • 92131
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
WF5ADB (Deutsche Boerse AG)YesCommon StockDEEURNov 1999
KTOSNasdaqGS (Nasdaq Global Select)YesCommon StockUSUSDNov 1999
0JS0LSE (London Stock Exchange)YesCommon StockGBUSDNov 1999

Biography

Kratos Defense & Security Solutions, Inc. provides mission critical products, solutions, and services in the United States. The company operates through two segments, Kratos Government Solutions and Unmanned Systems. The Kratos Government Solutions segment offers microwave electronic products, satellite communications, training systems, modular systems, and defense and rocket support services. The Unmanned Systems segment provides unmanned aerial systems, and unmanned ground and seaborne systems. It serves national security related agencies, the department of defense, intelligence agencies, and classified agencies, as well as international government agencies and domestic and international commercial customers. The company has a strategic collaboration with AeroVironment, Inc. to develop and demonstrate integrated and operationally effective multi-domain unmanned system solutions for near-peer and denied environments. Kratos Defense & Security Solutions, Inc. was founded in 1994 and is headquartered in San Diego, California. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/17 00:22
End of Day Share Price2020/02/14 00:00
Earnings2019/09/29
Annual Earnings2018/12/30


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.