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Photo: U.S. Navy https://www.navy.mil/Press-Office/News-Stories/display-news/Article/4575192/us-allies-partners-executed-pacific-dragon-2026-exercise/

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/fbcb4b4c-7855-4d5e-a594-3a8e193cab9b

SAN DIEGO, Sept. 09, 2026 (GLOBE NEWSWIRE) -- Kratos Defense & Security Solutions, Inc. (Nasdaq: KTOS), a technology company in defense, national security, and global markets, today announced the successful mission of its Aegis Readiness Assessment Vehicle Type B (ARAV-B) ballistic missile target from the Pacific Missile Range Facility in Hawaii. The vehicle was fired on August 6 during Pacific Dragon 2026, a premier multinational ballistic missile defense (BMD) exercise led by the U.S. 3rd Fleet.

Photo: U.S. Navy https://www.dvidshub.net/image/9880612/arav-b-launch-during-pacific-dragon-2026

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/e2c17ce8-d415-4f9b-95a6-a9f92ed3f8b7

The biennial exercise, which took place in the waters around the Hawaiian Islands from August 6-15, was designed to improve the ability of allied and partner forces to track and intercept ballistic missiles together. The multi-mission event combined coordinated missile defense operations with tactical data-link information sharing across forces from the United States, Australia, Chile, Italy, Japan, the Republic of Korea, and Spain, in conjunction with the U.S. Missile Defense Agency.

Kratos’ ARAV-B is part of the broader ARAV family of configurable short- and medium-range ballistic missile targets that can accurately emulate diverse and evolving threats. The ARAV Type B is a two-stage, spin-stabilized target featuring Kratos’ commercial Oriole rocket motor as the upper stage. The ARAV-B has now flown 43 successful target missions supporting the Naval Surface Warfare Center, Port Hueneme Division, White Sands Detachment and the Missile Defense Agency. Kratos’ commercially developed Oriole rocket motor, along with the larger Zeus family of rockets and the Erinyes hypersonic testbed vehicle demonstrate Kratos’ continuing commitment to investing in technologies and capabilities to serve the warfighter today.

Dave Carter, President of the Kratos Defense & Rocket Support Services (DRSS) Division, said, "Kratos is proud to support the U.S. 3rd Fleet and our allied partners in this critical demonstration of integrated air and missile defense capabilities. The successful launch of our ARAV-B target during Pacific Dragon 2026 highlights our team's ability to rapidly develop and field affordable, threat-representative systems. By providing highly reliable target solutions, we ensure that advanced combat systems, such as the Baseline 10 and AN/SPY-6 radar on the USS Jack H. Lucas, are tested against the most realistic and demanding scenarios possible."

The Kratos Ballistic Missile Defense target family includes multiple configurations beyond the Type B, such as the two-stage Type C vehicle and the three-stage Type TTO (Terrier-Terrier-Oriole). With their built-in modularity, these flight-proven Kratos systems can be rapidly reconfigured to support a range of missions including low-apogee, long duration hypersonic testing at speeds exceeding Mach 10.

Eric DeMarco, President and CEO of Kratos, said, "At Kratos, we are focused on delivering real, mission-relevant products and systems to our customers, not PowerPoints or concepts. We fundamentally believe that affordability is a technology, and we utilize our internal investments to bring national security relevant hardware to the field faster. By integrating existing assets and proven technologies, Kratos is first to market with cost-effective solutions that save our government customers and the U.S. taxpayer significant time and money. Our successful participation in Pacific Dragon 2026 is another testament to Kratos’ ability to execute on our strategy and deliver mission-critical solutions for global security."

About Kratos Defense & Security Solutions
Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) is a technology, products, system and software company addressing the defense, national security, and commercial markets. Kratos makes true internally funded research, development, capital and other investments, to rapidly develop, produce and field solutions that address our customers’ mission critical needs and requirements. At Kratos, affordability is a technology, and we seek to utilize proven, leading-edge approaches and technology, not unproven bleeding edge approaches or technology, with Kratos’ approach designed to reduce cost, schedule and risk, enabling us to be first to market with cost effective solutions. We believe that Kratos is known as an innovative disruptive change agent in the industry, a company that is an expert in designing products and systems up front for successful rapid, large quantity, low-cost future manufacturing which is a value-add competitive differentiator for our large traditional prime system integrator partners and also to our government and commercial customers. Kratos intends to pursue program and contract opportunities as the prime or lead contractor when we believe that our probability of win (PWin) is high and any investment required by Kratos is within our capital resource comfort level. We intend to partner and team with a large, traditional system integrator when our assessment of PWin is greater or required investment is beyond Kratos’ comfort level. Kratos’ primary business areas include virtualized ground systems for satellites and space vehicles including software for command & control (C2) and telemetry, tracking and control (TT&C), jet powered unmanned aerial drone systems, hypersonic vehicles and rocket systems, propulsion systems for drones, missiles, loitering munitions, supersonic systems, space craft and launch systems, C5ISR and microwave electronic products for missile, radar, missile defense, space, satellite, counter UAS, directed energy, communication and other systems, and virtual & augmented reality training systems for the warfighter. For more information, visit www.KratosDefense.com and follow Kratos on LinkedIn and X.

Notice Regarding Forward-Looking Statements
Certain statements in this press release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are made on the basis of the current beliefs, expectations and assumptions of the management of Kratos and are subject to significant risks and uncertainty. Investors are cautioned not to place undue reliance on any such forward-looking statements. All such forward-looking statements speak only as of the date they are made, and Kratos undertakes no obligation to update or revise these statements, whether as a result of new information, future events or otherwise. Although Kratos believes that the expectations reflected in these forward-looking statements are reasonable, these statements involve many risks and uncertainties that may cause actual results to differ materially from what may be expressed or implied in these forward-looking statements. For a further discussion of risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to the business of Kratos in general, see the risk disclosures in the Annual Report on Form 10-K of Kratos for the year ended December 29, 2025, and in subsequent reports on Forms 10-Q and 8-K and other filings made with the SEC by Kratos.

Press Contact: 
Claire Cantrell
[email protected]

Investor Relations: 
877-934-4687
[email protected]

It has been about a month since the last earnings report for Kratos (KTOS - Free Report) . Shares have lost about 13.7% in that time frame, underperforming the S&P 500.

But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Kratos due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Kratos Defense Q2 Earnings and Revenues Outpace Estimates

Kratos Defense & Security Solutions, Inc. reported second-quarter 2026 adjusted earnings of 21 cents per share, which beat the Zacks Consensus Estimate of 13 cents by 61.5%. The bottom line also increased 90.9% from the year-ago quarter’s 11 cents.

Kratos Defense reported GAAP earnings of 2 cents per share, which came in line with the year-ago quarter.

KTOS’ Revenue Growth AcceleratesRevenues of $458.8 million beat the consensus estimate of $412 million by 11.4% and increased 30.5% year over year. Kratos Government Solutions led the growth, while total organic revenues advanced 19.1%.

Product sales climbed 33.5% year over year to $289.1 million. Service revenues increased 25.8% to $169.7 million.

Operational Update of Kratos DefenseSelling, general and administrative expenses jumped 35.5% to $73.3 million. Research and development expenses rose 33.3% to $13.6 million.

Amortization of intangible assets increased to $10.1 million from $2.8 million, while depreciation rose to $3.9 million from $3 million.

Kratos recorded an operating loss of $1.6 million against the operating income of $3.7 million a year earlier.

KTOS’ Segmental PerformanceUnmanned Systems: Revenues from this segment totaled $79.1 million compared with $73.2 million in the year-ago quarter. The increase was primarily driven by Valkyrie-related activity.

Kratos Government Solutions: Revenues from this segment amounted to $379.7 million compared with $278.3 million in the year-ago quarter. This rise was due to organic revenue growth across its Defense and Rocket Support business, Turbine Technologies and Microwave Products and Space, Training and Cyber businesses, with organic revenue growth rates of 50.2%, 43.3%, 29.5% and 8.7%, respectively, year over year.

Financial Details of KTOSAs of June 28, 2026, cash and cash equivalents totaled $1.44 billion, up from $0.56 billion as of Dec. 28, 2025.

The company reported other current liabilities of $19.9 million as of June 28, 2026 compared with $9 million recorded as of Dec. 28, 2025.

The net cash used in operating activities amounted to $38.4 million during the first six months of 2026 compared with $40.9 million in the same period of 2025.

KTOS’ Backlog Supports Demand VisibilityConsolidated bookings totaled $492.2 million in the second quarter, resulting in a book-to-bill ratio of 1.1. The last-12-month book-to-bill ratio was 1.3, with bookings of $1.99 billion.

Backlog increased to $2.08 billion as of June 28, 2026 from $2.05 billion at the end of the first quarter. Funded backlog was $1.57 billion, while unfunded backlog totaled $512.7 million. The bid and proposal pipeline expanded to $15 billion from $14.3 billion.

Kratos Defense’s GuidanceKTOS projects third-quarter 2026 revenues to be in the range of $460-$480 million. The Zacks Consensus Estimate for revenues is pegged at $460.3 million, which is at the lower end of the company’s guided range.

Kratos raised its full-year 2026 revenue guidance to $1.75-$1.81 billion compared with the previous range of $1.7-$1.76 billion. The Zacks Consensus Estimate for revenues is pegged at $1.75 billion, which is at the lower end of the company’s guided range.

Kratos Defense now expects operating cash flows to be in the range of $30-$50 million and free cash flow to be in the band of $85-$105 million for 2026.

How Have Estimates Been Moving Since Then?Since the earnings release, investors have witnessed a upward trend in fresh estimates.

The consensus estimate has shifted 21.43% due to these changes.

VGM ScoresCurrently, Kratos has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock has a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

OutlookEstimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Kratos has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Key Takeaways Kratos Defense secured major awards across satellite communications and mission-critical defense hardware.KTOS' 2026 and 2027 EPS estimates rise 50.91% and 37.06%, respectively, year over year.Supply-chain disruptions and a 4.54% ROE remain key headwinds despite KTOS' discounted valuation. Kratos Defense & Security Solutions, Inc.’s (KTOS - Free Report) shares have lost 37% year to date compared with the Zacks Aerospace-Defense Equipment industry’s decline of 4.5%. Kratos Defense is the primary unmanned aerial target drone system provider for the U.S. Air Force, Navy, Army and several allied defense agencies. The company is also expanding in hypersonics, rocket systems, propulsion and microwave electronics.
 

Image Source: Zacks Investment Research

Other defense equipment stocks like Teledyne Technologies (TDY - Free Report) and AeroVironment (AVAV - Free Report) have delivered mixed performance in the said time frame. Shares of Teledyne Technologies have risen 18.7% while those of AeroVironment have lost 39.9%. Teledyne Technologies is benefiting from strong demand in the space market, particularly for infrared detectors, imaging sensors and specialty semiconductors. AeroVironment is benefiting from the growing adoption of unmanned systems by securing major global defense contracts and expanding its portfolio of tactical drones, smart munitions and control software.

Given Kratos Defense’s underperformance, investors may be wondering what lies ahead for the stock. Let’s examine the key factors and assess its investment prospects to help make an informed decision.

Tailwinds for KTOS StockKratos Defense serves the defense industry with products spanning target drones, rocket systems and SRMs, hypersonic vehicles, jet engines for drones and missiles, and virtualized ground systems for satellites. Management noted that defense funding priorities continue to include areas tied to Kratos programs. In second-quarter 2026, consolidated bookings totaled $492.2 million, implying a 1.1 book-to-bill, while the last 12-month book-to-bill was 1.3.

On Sept. 1, 2026, Kratos Defense secured a $20 million-plus contract from an Asian defense customer to provide mobile satellite communications gateways, highlighting growing demand for resilient communications infrastructure in contested environments. For Kratos Defense, the award provides both near-term revenues and a strategic opportunity to expand its Space and communications business in the Asia-Pacific region.

In August 2026, Kratos Defense received an approximately $35 million award for a national security-related military-grade hardware production program, with the hardware and related systems expected to directly support warfighters in the field. The award reinforces its role as a supplier of mission-critical defense hardware across areas such as hypersonics, counter-drone systems, air defense, missiles, radars and directed-energy systems. The contract provides incremental revenues while validating the company’s ability to move advanced defense technologies into large-scale production.

Kratos Defense is expanding production of its Spartan TDI-J85 turbojet engines to support Boeing’s Joint Direct Attack Munition Long Range (JDAM LR) program, following the U.S. Air Force’s recent $75 million production award to Boeing. The JDAM LR is a long-range precision weapon designed to carry a 500-pound-class payload more than 300 nautical miles, with KTOS’ J85 engine providing the propulsion needed to significantly extend the weapon’s range. This moves the Spartan engine from development into higher-volume production and gives the company exposure to a potentially scalable weapons program.

Headwinds for KTOSKratos Defense continues to cite supply-chain disruptions and parts availability as industry issues that can delay material receipts and deliveries. Management’s 2026 outlook explicitly assumes potential manufacturing and supply-chain disruptions, parts shortages and continued cost increases. Inventoried costs increased to $235.9 million as of June 28, 2026, from $188.2 million as of 2025-end, consistent with larger lot purchases and long-lead items. Persistently higher input costs or further supply friction could pressure margins and keep cash conversion below investor expectations.

Estimates for KTOS StockThe Zacks Consensus Estimate for 2026 and 2027 earnings per share (EPS) indicates an increase of 50.91% and 37.06%, respectively, year over year. 
 

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for Teledyne Technologies’ 2026 and 2027 EPS implies an increase of 12.32% and 8.9%, respectively, year over year. The consensus estimate for AeroVironment’s fiscal 2027 EPS indicates a decrease of 1.8% year over year.  

KTOS’ Earnings Surprise HistoryThe company beat on earnings in each of the trailing four quarters, delivering an average surprise of 32.47%.

Image Source: Zacks Investment Research

KTOS’ Return on Equity Lower Than IndustryThe company’s trailing 12-month return on equity of 4.54% is lower than the industry average of 15.35%. Return on equity, a profitability measure, reflects how effectively a company utilizes its shareholders’ funds to generate income.

Image Source: Zacks Investment Research

KTOS Stock Trades at a DiscountIn terms of valuation, KTOS’ forward 12-month price/sales (P/S) is 4.35X, a discount to the industry’s average of 7.50X.

Image Source: Zacks Investment Research

What Should an Investor Do Now?Kratos Defense is benefiting from sustained defense spending across unmanned systems, hypersonics, propulsion, space communications, and mission-critical defense hardware, with recent awards strengthening its position in these high-growth markets.

Given its current price performance and lower ROE, new investors should wait and look for a better entry point. Investors who already own this stock may continue holding it, given its strong earnings growth. KTOS has a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

SAN DIEGO, Sept. 01, 2026 (GLOBE NEWSWIRE) -- Kratos Defense & Security Solutions, Inc. (Nasdaq: KTOS), a technology company in defense, national security and global markets, announced today that it has been awarded a contract valued at more than $20 million to deliver mobile satellite communication (SATCOM) gateways for a defense customer in Asia.

Around the world, fixed communications infrastructure is becoming increasingly vulnerable to emerging threats. Recent conflicts and contested environments have shown that stationary SATCOM facilities can be easily targeted or disrupted, and modern operations often face denied spectrum and damaged public networks. These conditions highlight a critical need for defense organizations to deploy mobile SATCOM gateways that can maintain secure, reliable connectivity when traditional systems fail. With this capability, warfighters gain access to real‑time situational awareness and mission‑critical data where and when it matters most.

As part of the system, Kratos will deliver its rapid‑deployable, truck‑mounted Trifold® transportable antennas that can be deployed without any special tools and ready to discretely transport at a moment’s notice. These Trifold® antennas are integrated into the mobile SATCOM hub that provides high‑throughput, dependable communications in dynamic field environments.

The turnkey system also incorporates a shelter containing baseband platforms and advanced monitoring software, including Kratos’ Compass® product for complete monitor‑and‑control (M&C) of mission‑critical networks, and Kratos’ Monics® product for spectrum monitoring and interference detection, forming a cohesive and resilient mobile gateway tailored for defense operations.

This award strengthens Kratos’ position as a leader in transportable antennas and ground system technologies. The program also expands Kratos’ presence in the Asia-Pacific region and reinforces the company’s role as a trusted provider of advanced, resilient communications systems for defense applications worldwide.

“This capability is ultimately about giving operators on the ground what they need most: dependable communications they can count on in the middle of fast-moving missions,” said John Chay, Vice President of Business Development in Asia, at Kratos. “When fixed infrastructure is compromised, this mobile gateway lets warfighters stay connected, aware, and supported wherever the mission takes them.”

About Kratos Defense & Security Solutions
Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) is a technology, products, system and software company addressing defense, national security, and commercial markets. Kratos makes true internally funded research, development, capital and other investments, to rapidly develop, produce and field solutions that address our customers’ mission critical needs and requirements. At Kratos, affordability is a technology, and we seek to utilize proven, leading-edge approaches and technology, not unproven bleeding edge approaches or technology, with Kratos’ approach designed to reduce cost, schedule and risk, enabling us to be first to market with cost effective solutions. We believe that Kratos is known as an innovative disruptive change agent in the industry, a company that is an expert in designing products and systems up front for successful rapid, large quantity, low-cost future manufacturing which is a value-add competitive differentiator for our large traditional prime system integrator partners and also to our government and commercial customers. Kratos intends to pursue program and contract opportunities as the prime or lead contractor when we believe that our probability of win (PWin) is high and any investment required by Kratos is within our capital resource comfort level. We intend to partner and team with a large, traditional system integrator when our assessment of PWin is greater or required investment is beyond Kratos’ comfort level. Kratos’ primary business areas include virtualized ground systems for satellites and space vehicles including software for command & control and telemetry, tracking and control, jet powered unmanned aerial drone systems, hypersonic vehicles and rocket systems, propulsion systems for drones, missiles, loitering munitions, supersonic systems, space craft and launch systems, C5ISR and microwave electronic products for missile, radar, missile defense, space, satellite, counter unmanned aircraft systems, directed energy, communication and other systems, and virtual & augmented reality training systems for the warfighter. For more information, visit www.KratosDefense.com and follow Kratos on LinkedIn and X.

Notice Regarding Forward-Looking Statements
Certain statements in this press release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are made on the basis of the current beliefs, expectations and assumptions of the management of Kratos and are subject to significant risks and uncertainty. Investors are cautioned not to place undue reliance on any such forward-looking statements. All such forward-looking statements speak only as of the date they are made, and Kratos undertakes no obligation to update or revise these statements, whether because of new information, future events or otherwise. Although Kratos believes that the expectations reflected in these forward-looking statements are reasonable, these statements involve many risks and uncertainties that may cause actual results to differ materially from what may be expressed or implied in these forward-looking statements. For a further discussion of risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to the business of Kratos in general, see the risk disclosures in the Annual Report on Form 10-K of Kratos for the year ended December 28, 2025, and in subsequent reports on Forms 10-Q and 8-K and other filings made with the Security and Exchange Commission by Kratos.

Press Contact: 
Claire Cantrell
[email protected]

Investor Relations: 
877-934-4687
[email protected]

Bamco Inc. NY purchased a new stake in Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS – Free Report) during the second quarter, according to the company in its most recent filing with the Securities and Exchange Commission. The institutional investor purchased 1,077,941 shares of the aerospace company’s stock, valued at approximately $53,746,000. Bamco Inc. NY owned about 0.57% of Kratos Defense & Security Solutions as of its most recent filing with the Securities and Exchange Commission.

Several other large investors have also recently bought and sold shares of KTOS. Mcguire Capital Advisors Inc. bought a new position in shares of Kratos Defense & Security Solutions during the fourth quarter worth approximately $25,000. Atlantic Union Bankshares Corp boosted its holdings in shares of Kratos Defense & Security Solutions by 7,600.0% in the 4th quarter. Atlantic Union Bankshares Corp now owns 385 shares of the aerospace company’s stock valued at $29,000 after purchasing an additional 380 shares in the last quarter. Murphy & Mullick Capital Management Corp grew its position in Kratos Defense & Security Solutions by 115.4% in the fourth quarter. Murphy & Mullick Capital Management Corp now owns 420 shares of the aerospace company’s stock valued at $32,000 after acquiring an additional 225 shares during the last quarter. Vision Retirement LLC grew its holdings in shares of Kratos Defense & Security Solutions by 288.2% during the 1st quarter. Vision Retirement LLC now owns 427 shares of the aerospace company’s stock valued at $30,000 after purchasing an additional 317 shares during the last quarter. Finally, Kemnay Advisory Services Inc. bought a new position in shares of Kratos Defense & Security Solutions in the 4th quarter valued at $37,000. 75.92% of the stock is owned by institutional investors.

Kratos Defense & Security Solutions Stock Performance KTOS stock opened at $52.93 on Thursday. The firm has a market cap of $9.94 billion, a PE ratio of 311.35 and a beta of 1.08. The stock has a 50-day moving average price of $52.54 and a 200-day moving average price of $65.73. The company has a current ratio of 5.54, a quick ratio of 4.99 and a debt-to-equity ratio of 0.04. Kratos Defense & Security Solutions, Inc. has a 1-year low of $43.09 and a 1-year high of $134.00.

Kratos Defense & Security Solutions (NASDAQ:KTOS – Get Free Report) last posted its quarterly earnings results on Tuesday, August 4th. The aerospace company reported $0.21 earnings per share (EPS) for the quarter, topping analysts’ consensus estimates of $0.14 by $0.07. Kratos Defense & Security Solutions had a return on equity of 3.07% and a net margin of 2.03%.The firm had revenue of $458.80 million for the quarter, compared to analysts’ expectations of $410.36 million. During the same period in the prior year, the business earned $0.11 EPS. The company’s revenue for the quarter was up 30.5% compared to the same quarter last year. As a group, equities research analysts expect that Kratos Defense & Security Solutions, Inc. will post 0.57 earnings per share for the current year. Wall Street Analysts Forecast Growth A number of brokerages have issued reports on KTOS. Citigroup reaffirmed a “market outperform” rating on shares of Kratos Defense & Security Solutions in a report on Tuesday, July 28th. UBS Group reissued a “neutral” rating and set a $82.00 price target on shares of Kratos Defense & Security Solutions in a research note on Thursday, May 7th. Canaccord Genuity Group boosted their price target on Kratos Defense & Security Solutions from $130.00 to $135.00 and gave the stock a “buy” rating in a report on Wednesday, August 5th. Piper Sandler raised Kratos Defense & Security Solutions from a “neutral” rating to an “overweight” rating and set a $75.00 price objective for the company in a research note on Wednesday, August 5th. Finally, Truist Financial dropped their price objective on shares of Kratos Defense & Security Solutions from $135.00 to $104.00 and set a “buy” rating for the company in a report on Thursday, August 13th. One investment analyst has rated the stock with a Strong Buy rating, eighteen have assigned a Buy rating, two have assigned a Hold rating and one has given a Sell rating to the company. According to MarketBeat, the company currently has a consensus rating of “Moderate Buy” and a consensus target price of $99.47.

Get Our Latest Stock Analysis on KTOS

Insiders Place Their Bets In other Kratos Defense & Security Solutions news, insider Phillip D. Carrai sold 26,500 shares of the stock in a transaction that occurred on Monday, August 17th. The stock was sold at an average price of $63.25, for a total value of $1,676,125.00. Following the transaction, the insider owned 182,084 shares in the company, valued at approximately $11,516,813. This represents a 12.70% decrease in their ownership of the stock. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which is accessible through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, Director Scot B. Jarvis sold 10,000 shares of Kratos Defense & Security Solutions stock in a transaction on Tuesday, August 18th. The shares were sold at an average price of $63.50, for a total transaction of $635,000.00. Following the completion of the sale, the director directly owned 65,123 shares of the company’s stock, valued at approximately $4,135,310.50. The trade was a 13.31% decrease in their position. The SEC filing for this sale provides additional information. In the last quarter, insiders have sold 433,688 shares of company stock valued at $26,990,882. 1.50% of the stock is currently owned by corporate insiders.

(Free Report)

Kratos Defense & Security Solutions, Inc (NASDAQ: KTOS) is a technology-driven company that specializes in national security and defense solutions for government and military customers. The firm’s core capabilities span unmanned systems, satellite communications, missile defense, cyber security, and directed-energy weapons. Through its integrated approach, Kratos delivers mission-critical products and services designed to enhance operational readiness and support force modernization initiatives.

In the unmanned systems arena, Kratos develops high-performance aerial platforms used as target drones, low-cost attritable aircraft and experimental stealth demonstrators.

See Also Five stocks we like better than Kratos Defense & Security Solutions Williams-Sonoma’s Quarter Gave Bulls More Than Just a Beat-and-Raise Alcoa’s Gallium Project Opens a New Door Beyond Aluminum Oura’s $16 Billion IPO Could Put a New Price on Wearable Tech Can Tesla’s Flying Roadster Distract From Its Real Risks? Want to see what other hedge funds are holding KTOS? Visit HoldingsChannel.com to get the latest 13F filings and insider trades for Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS – Free Report).

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Key Takeaways Kratos Defense grew Unmanned Systems revenues to $79.1 million in Q2 2026, driven by Valkyrie activity.Elbit Systems' C4I, ISTAR and Land Systems revenues rose 11%, 22% and 32%, respectively, in Q2 2026.KTOS is expanding across hypersonics, rocket systems, propulsion and advanced microwave technologies. Kratos Defense & Security Solutions, Inc. (KTOS - Free Report) and Elbit Systems (ESLT - Free Report) share a strong strategic commonality as technology-focused defense companies positioned around the modernization of military capabilities. Unlike traditional defense contractors that primarily build large, complex platforms such as fighter aircraft, tanks and naval vessels, KTOS and ESLT have a significant presence in high-technology, mission-critical systems. Their expertise extends across unmanned systems, electronic warfare, intelligence and surveillance, communications, precision strike and advanced defense electronics.

This positioning is increasingly relevant as militaries shift toward more distributed, autonomous and software-enabled warfare. Governments are looking for systems that can improve situational awareness, accelerate decision-making, enhance targeting precision and operate effectively in increasingly contested environments. At the same time, defense budgets are facing pressure to deliver greater capability at lower cost, creating demand for systems that are scalable, rapidly deployable and easier to upgrade than traditional large platforms.

Let's compare the stocks' fundamentals to determine which one is a better investment option at present.

Factors Acting in Favor of KTOS StockKratos Defense is the primary unmanned aerial target drone system provider for the U.S. Air Force, Navy, Army and several allied defense agencies. This position has led to multiple recent contracts and partnerships that are expanding its presence in the global UAS market, including activity tied to the XQ-58A Valkyrie. In second-quarter 2026, Unmanned Systems revenues increased to $79.1 million from $73.2 million a year earlier, driven primarily by Valkyrie-related activity. Bookings in the segment were worth $78.4 million in the quarter, implying a 1.0 book-to-bill. Backlog totaled $374.6 million as of June 28, 2026.

Beyond unmanned systems, KTOS is expanding in hypersonics, rocket systems, propulsion and microwave electronics. The company continues to highlight orders for hypersonic vehicles and ongoing development efforts within its Ghost Works organization. KTOS witnessed strong organic growth across several Kratos Government Solutions businesses in second-quarter 2026, with Defense Rocket Systems, Turbine Technologies and Microwave Products growing 50.2%, 43.3% and 29.5%, respectively.

Factors Acting in Favor of ESLT StockElbit Systems has a broader portfolio spanning unmanned systems, electronic warfare, electro-optics, command-and-control, communications and precision-guided systems. In the second quarter of 2026, revenues from C4I & Cyber, ISTAR & Electronic Warfare, Land Systems and Elbit Systems of America grew 11%, 22%, 32% and 17%, respectively. Aerospace was the only major area to decline, falling 8% mainly due to an unfavorable project mix. A key positive is the company’s record $32 billion backlog, which provides strong long-term revenue visibility. International customers account for about 73% of the backlog, while 42% is expected to be executed through the remainder of 2026 and 2027.

The quarter underscores ESLT’s continued benefits from rising global defense spending and growing demand for advanced defense technologies. The combination of double-digit sales growth, expanding margins, record backlog, stronger cash flow and growing international demand provides a strong foundation for continued growth.

How Do Zacks Estimates Compare for KTOS & ESLT?The Zacks Consensus Estimate for Kratos Defense’s 2026 and 2027 earnings per share (EPS) indicates an increase of 50.91% and 37.06%, respectively, year over year.
 

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for Elbit Systems’ 2026 and 2027 EPS implies an improvement of 26.51% and 17.05%, respectively, year over year.

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ESLT’s Valuation More Attractive Than KTOSKTOS’ shares trade at a forward 12-month Price/Sales (P/S F12M) of 4.84X compared with ESLT’s 3.24X, making ESLT relatively more attractive from a valuation standpoint.

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Debt Position of KTOS & ESLTCurrently, KTOS’s total debt-to-capital ratio is zero, whereas ESLT’s is 5.72%.

The time-to-interest earned ratio for Kratos Defense at the end of second quarter of 2026 was negative, while that for Elbit Systems was 6.7. The ratio, being greater than one, reflects the company’s ability to meet future interest obligations without difficulties.

KTOS & ESLT’s Price PerformanceIn the past year, shares of Elbit Systems have risen 48.9%, while those of Kratos Defense have lost 22.7%.

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KTOS or ESLT: Which Is a Better Choice Now?Kratos Defense is strengthening its position in next-generation defense through leadership in unmanned aerial systems while expanding across hypersonics, rocket systems, propulsion, and advanced microwave technologies. Elbit Systems benefits from broad exposure to advanced defense technologies, with strong demand across electronic warfare, unmanned systems, land systems, communications, and precision-guided solutions, supported by a large international backlog and rising global defense spending.

Our choice at the moment is Elbit Systems, given its better price performance and more attractive valuation than Kratos Defense. ESLT carries a Zacks Rank #2 (Buy), while KTOS holds a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Kratos Recently Ordered Long-lead Components for Spartan Engines  | Source: Kratos Defense & Security Solutions, Inc.

SAN DIEGO, Aug. 24, 2026 (GLOBE NEWSWIRE) -- Kratos Defense & Security Solutions, Inc. (Nasdaq: KTOS), a technology company in defense, national security, and global markets, today announced an allocation of its expanded Spartan engine production capacity to support Boeing’s Joint Direct Attack Munition Long Range production program with TDI-J85 (J85) engines.

This month, the U.S. Air Force awarded Boeing a $75 million Undefinitized Contract Action (UCA) to acquire the BSU-111/B Payload Delivery Unit (PDU) Joint Direct Attack Munition Long Range (JDAM LR), a precision-guided munition that can travel over 300 nautical miles with a 500-pound class (226-kilogram) payload. The Kratos J85 engine has been selected as the engine source to power the munition, enhancing the affordable precision-strike capability with our high-volume, low-cost, military-grade propulsion systems for the U.S. military and allied partners.

“National security priorities demand affordable mass and resilient, domestic supply chains,” said Steve Fendley, President of Kratos Unmanned Systems. “Kratos’ internally funded and proactive supply-chain investments ensure we are not just preparing for future demand, and we are actively manufacturing the high-volume propulsion systems our customers require today.”

The J85 engines are produced in Kratos’ advanced 22,500-square-foot Propulsion Manufacturing Facility in Auburn Hills, Michigan, which is fully operational and optimized to sustain full-rate production.

To bolster and stabilize the defense industrial base supply chain, Kratos has initiated procurement of long-lead components for Spartan engines to support a large production run for a number of customers and applications in 2027, Boeing JDAM LR being key as the engine was originally designed to support this application. The large run enables economies of scale for cost and to address the published need by the Department of War to expand the U.S. industrial base and especially key technologies such as jet engines. Kratos is also executing a three-phase manufacturing infrastructure plan designed to expand production capacity, enabling rapid responsiveness to emerging customer requirements.

“The operational readiness of our Auburn Hills facility marks a pivotal transition from engineering development to high-rate tactical manufacturing,” said Joseph Kovasity, Senior Vice President of Kratos TDI. “Integrating the Spartan turbojet family into Boeing’s JDAM LR program provides a reliable, scalable, domestically sourced propulsion solution that meets urgent national defense needs.”

About Kratos Defense & Security Solutions
Kratos Defense & Security Solutions, Inc. (Nasdaq: KTOS) is a technology, products, system and software company addressing the defense, national security, and global markets. Kratos makes true internally funded research, development, capital and other investments, to rapidly develop, produce and field solutions that address our customers' mission critical needs and requirements. At Kratos, affordability is a technology, and we seek to utilize proven, leading-edge approaches and technology, not unproven bleeding-edge approaches, with Kratos' approach designed to reduce cost, schedule and risk, enabling us to be first to market with cost effective solutions. We believe that Kratos is known as an innovative disruptive change agent in the industry, a company that is an expert in designing products and systems up front for successful rapid, large quantity, low-cost future manufacturing which is a value-add competitive differentiator for our large traditional prime system integrator partners and also to our government and commercial customers. Kratos' primary business areas include virtualized ground systems for satellites and space vehicles; jet-powered unmanned aerial drone systems; advanced vehicles and rocket systems; propulsion systems for drones, missiles, loitering munitions, supersonic systems, spacecraft, and launch systems; C5ISR and microwave electronic products for missile, radar, missile defense, space, satellite, counter-UAS, directed energy, communication, and other systems; and virtual and augmented reality training systems for the warfighter. For more information, visit www.KratosDefense.com and follow Kratos on LinkedIn and X.

Notice Regarding Forward-Looking Statements
Certain statements in this press release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are made on the basis of the current beliefs, expectations and assumptions of the management of Kratos and are subject to significant risks and uncertainty. Investors are cautioned not to place undue reliance on any such forward-looking statements. All such forward-looking statements speak only as of the date they are made, and Kratos undertakes no obligation to update or revise these statements, whether as a result of new information, future events or otherwise. Although Kratos believes that the expectations reflected in these forward-looking statements are reasonable, these statements involve many risks and uncertainties that may cause actual results to differ materially from what may be expressed or implied in these forward-looking statements. For a further discussion of risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to the business of Kratos in general, see the risk disclosures in the Annual Report on Form 10-K of Kratos for the year ended December 29, 2025, and in subsequent reports on Forms 10-Q and 8-K and other filings made with the SEC by Kratos.

Press Contact: 
Claire Cantrell
[email protected]

Investor Relations: 
877-934-4687
[email protected]

Key Takeaways Kratos Defense's backlog reached $2.08B, while Q2 bookings totaled $492.2M and the pipeline hit $15B.Kratos Defense plans 3,000 small jet engines in 2027 and about 40 Valkyrie aircraft annually from 2028.Heavy investments may pressure cash flow as KTOS manages supply constraints, hiring and production ramps. Kratos Defense & Security Solutions, Inc. (KTOS - Free Report) is entering an important stage of its growth story as rising defense demand begins translating into higher production volumes.

The bigger opportunity is Kratos Defense’s expanding backlog and pipeline. Consolidated backlog increased to $2.08 billion, while bookings reached $492.2 million in the second quarter. Over the last 12 months, bookings totaled $1.99 billion, resulting in a 1.3x book-to-bill ratio. Its bid and proposal pipeline also increased to $15 billion, providing a substantial opportunity set beyond current contracted revenues.

Kratos Defense is now investing ahead of expected demand. The company plans to ramp production to 3,000 small jet engines in 2027 and approximately 40 Valkyrie aircraft annually beginning in 2028. It is also expanding facilities for hypersonics, advanced manufacturing, microwave electronics, engines, space and unmanned systems.

These investments are pressuring near-term cash generation, with Kratos Defense forecasting $125-$135 million of 2026 capital expenditures and $250-$275 million of total investments. However, management expects higher production volumes to create operating leverage as fixed infrastructure is utilized more efficiently.

The main risk is execution: Kratos Defense must manage significant investments, supply-chain constraints, parts shortages, hiring and production ramps. Still, the second-quarter results indicate that the company is increasingly transitioning from a defense technology developer into a scaled production platform, creating a potentially attractive multi-year growth opportunity.

Defense Companies Benefiting From Similar TrendsOther defense companies positioned to benefit from rising spending on autonomous systems, missile defense, propulsion, hypersonics and next-generation military technologies include:

Lockheed Martin (LMT - Free Report) remains one of the largest U.S. defense contractors, with significant exposure to missile defense, advanced aircraft, hypersonic systems and space programs.

RTX Corporation (RTX - Free Report) has strong exposure to missile systems, propulsion, radar and air-defense technologies, areas that remain important as military modernization priorities evolve.

KTOS Stock’s Earnings EstimatesThe Zacks Consensus Estimate for 2026 earnings per share indicates an increase of 50.91% year over year.

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KTOS Stock Trades at a DiscountIn terms of valuation, KTOS’ forward 12-month price-to-sales (P/S) is 5.15X, a discount to the industry’s average of 8.64X.

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KTOS Stock’s Price PerformanceIn the past month, the company’s shares have risen 17.3% compared with the industry’s 2.8% growth.

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KTOS’ Zacks RankThe company currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in KTOS over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Engine selected as a second-source propulsion system for the Joint Air-to-Surface Standoff Missile (JASSM), advancing the program to deliver small, low-cost, high-performance engines for missiles and uncrewed platforms  | Source: Kratos Defense & Security Solutions, Inc.

SAN DIEGO, Aug. 17, 2026 (GLOBE NEWSWIRE) -- Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS), a Technology Company in the Defense, National Security and Global Markets, and GE Aerospace (NYSE: GE) today announced that the GEK800 engine, which received the U.S. Military Engine Type Designation F143-ZZ-100, has been awarded a contract with the United States Air Force for the Engineering, Manufacturing and Development (EMD) of the turbofan as a second-source propulsion system for the Joint Air-to-Surface Standoff Missile (JASSM).

The designation and contract mark advancement of the program designed to provide small, low-cost, high-performance engines for use in cruise missiles, collaborative combat-type aircraft, and other uncrewed aerial vehicles.

“The F143-ZZ-100 designation and EMD award are a testament to the strong performance and capability of the GEK800 engine and the strength of our partnership with Kratos. This reflects years of disciplined engineering to deliver propulsion systems that meet the evolving, mission-critical requirements of our military customers,” said Amy Gowder, President and CEO of GE Aerospace Defense & Systems.

“Kratos has been working with our outstanding partner GE Aerospace and the United States Air Force to support the Department of War in reindustrializing U.S. manufacturing capacity and capability in the area of low cost, rapidly manufacturable, in large quantities, jet engines for drones, cruise missiles and other systems. Kratos and GE Aerospace are making significant investments with our government partners, to support U.S. National Security priorities,” said Eric DeMarco, President and CEO of Kratos.

The GEK800, now designated the F143, is an 800-lb thrust turbofan engine designed to power long-range missiles and other uncrewed applications. With a combination of internal investment plus support and funding from the Air Force Research Laboratory (AFRL), Kratos and GE Aerospace began working together in 2023 to complete a Technology Maturation and Risk Reduction (TMRR) phase including testing of the engine. The joint team has completed more than 50 engine starts in ground testing at Kratos and GE Aerospace testing facilities, and in 2025 successfully completed altitude testing at Purdue University’s Maurice J. Zucrow Laboratories.

About Kratos Defense & Security Solutions
Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) is a technology, products, system and software company addressing the defense, national security, and commercial markets. Kratos makes true internally funded research, development, capital and other investments, to rapidly develop, produce and field solutions that address our customers’ mission critical needs and requirements. At Kratos, affordability is a technology, and we seek to utilize proven, leading-edge approaches and technology, not unproven bleeding edge approaches or technology, with Kratos’ approach designed to reduce cost, schedule and risk, enabling us to be first to market with cost effective solutions. We believe that Kratos is known as an innovative disruptive change agent in the industry, a company that is an expert in designing products and systems up front for successful rapid, large quantity, low-cost future manufacturing which is a value-add competitive differentiator for our large traditional prime system integrator partners and also to our government and commercial customers. Kratos intends to pursue program and contract opportunities as the prime or lead contractor when we believe that our probability of win (PWin) is high and any investment required by Kratos is within our capital resource comfort level. We intend to partner and team with a large, traditional system integrator when our assessment of PWin is greater or required investment is beyond Kratos’ comfort level. Kratos’ primary business areas include virtualized ground systems for satellites and space vehicles including software for C2 and telemetry, tracking and control (TT&C), jet powered unmanned aerial drone systems, hypersonic vehicles and rocket systems, propulsion systems for drones, missiles, loitering munitions, supersonic systems, space craft and launch systems, C5ISR and microwave electronic products for missile, radar, missile defense, space, satellite, counter UAS, directed energy, communication and other systems, and virtual & augmented reality training systems for the warfighter. For more information, visit www.KratosDefense.com and follow Kratos on LinkedIn and X.

About GE Aerospace
GE Aerospace is a global aerospace propulsion, services, and systems leader with an installed base of approximately 49,000 commercial and 29,000 military aircraft engines. With a global team of approximately 53,000 employees building on more than a century of innovation and learning, GE Aerospace is committed to inventing the future of flight, lifting people up, and bringing them home safely. Learn more about how GE Aerospace and its partners are defining flight for today, tomorrow, and the future at www.geaerospace.com.

Notice Regarding Forward-Looking Statements
Certain statements in this press release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are made on the basis of the current beliefs, expectations and assumptions of the management of Kratos and are subject to significant risks and uncertainty. Investors are cautioned not to place undue reliance on any such forward-looking statements. All such forward-looking statements speak only as of the date they are made, and Kratos undertakes no obligation to update or revise these statements, whether as a result of new information, future events or otherwise. Although Kratos believes that the expectations reflected in these forward-looking statements are reasonable, these statements involve many risks and uncertainties that may cause actual results to differ materially from what may be expressed or implied in these forward-looking statements. For a further discussion of risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to the business of Kratos in general, see the risk disclosures in the Annual Report on Form 10-K of Kratos for the year ended December 28, 2025, and in subsequent reports on Forms 10-Q and 8-K and other filings made with the SEC by Kratos.

Kratos Press Contact:
Claire Cantrell
[email protected]

Kratos Investor Information:
877-934-4687
[email protected]

GE Aerospace Press Contact:
Deb Case
[email protected]

Key Takeaways Kratos Defense posted 30.5% revenue growth as broad-based gains lifted second-quarter results.Kratos Defense's bid pipeline grew to $15B, while a 1.3-to-1 book-to-bill points to rising backlog.KTOS targets hypersonics, propulsion, unmanned systems, missiles and space as defense spending increases.
Kratos Defense & Security Solutions, Inc. (KTOS - Free Report) appears to be building a stronger foundation for sustained growth as increasing defense demand translates into new contract awards and a growing pipeline of potential opportunities. During the second quarter of 2026, the company generated $458.8 million in revenues, up 30.5% year over year, while organic revenues increased 19.1%. The strong performance was supported by broad-based growth across Kratos Government Solutions.

The most notable indicator of Kratos Defense’ future growth potential is its approximately $15 billion bid and proposal pipeline. The opportunity pipeline increased from $14.3 billion at the end of the first quarter, reflecting a growing number of potential programs that could eventually become contract awards. While the pipeline does not represent secured revenues, its expansion provides evidence of the significant addressable opportunity available to the company.

KTOS is targeting several markets where government spending is increasing, including hypersonics, propulsion, unmanned systems, missile systems, space and advanced defense technologies. The company believes these markets are positioned for continued investment as the U.S. military modernizes its capabilities and seeks systems that can be produced at greater scale and lower cost.

This creates an important potential growth cycle: new contract awards increase backlog, production ramp us convert backlog into revenues, and successful program execution can create opportunities for additional awards. Kratos Defense’s current 1.3-to-1 book-to-bill ratio suggests that this cycle is already developing.

If the company continues converting opportunities into awards while successfully expanding production capacity, its $15 billion pipeline could become an increasingly important source of revenue growth and potentially support a stronger earnings trajectory over the coming years.

Companies Gain From Growing Demand for Next-Generation SystemsThe increasing U.S. focus on unmanned systems, hypersonics, propulsion, and other advanced defense technologies could also benefit defense companies with significant exposure to these markets, as discussed below:

Northrop Grumman (NOC - Free Report) has significant exposure to autonomous systems, strategic programs, space and advanced defense technologies, while AeroVironment (AVAV - Free Report) is positioned more directly toward unmanned aircraft and autonomous systems.

KTOS Stock’s Earnings EstimatesThe Zacks Consensus Estimate for 2026 earnings per share indicates an increase of 49.09% year over year.

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KTOS Stock Trades at a DiscountIn terms of valuation, KTOS’ forward 12-month price-to-sales (P/S) is 5.78X, a discount to the industry’s average of 8.68X.

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KTOS Stock’s Price PerformanceIn the past three months, KTOS’ shares have risen 14.3% compared with the industry’s 0.7% growth.

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KTOS’ Zacks RankThe company currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Key Takeaways Ondas secured an IMOD tender to develop and produce next-generation tactical attack drones.The program targets low-cost, scalable drones for rapid deployment across frontline combat units.Ondas aims to link drones, sensors and robotic platforms through coordinated autonomous networks.
Ondas Inc. (ONDS - Free Report) recently secured a multi-million-dollar tender from the Israeli Ministry of Defense (IMOD) to develop and produce next-generation tactical attack drones, further driving its expansion into advanced autonomous defense systems. The program will focus on developing low-cost, scalable tactical attack drones designed for rapid deployment across frontline combat units. The initiative reflects a broader shift in modern warfare toward autonomous systems that can be produced quickly and deployed at scale.

The award strengthens Ondas’ position in the tactical aerial attack and precision-strike market. The company is building an integrated autonomous defense platform spanning air defense and counter-UAS, aerial intelligence, aerial attack and unmanned ground systems. Ondas plans to deliver a broader operational capability including the aerial platform, autonomous functions, mission software, system integration, production readiness and operational support. Its AI-powered command and mission-management software is designed to connect these capabilities, allowing drones, sensors, robotic platforms and command systems to operate as part of a coordinated autonomous network.

Tactical drones are becoming increasingly important on the modern battlefield because they can provide frontline units with rapid, flexible and relatively affordable aerial capabilities. For Ondas, this creates an opportunity to address growing demand for autonomous systems that combine speed, affordability, precision and scalability. Ondas also sees similar opportunities in the United States and other allied markets as governments increasingly prioritize affordable autonomous defense technologies. In July, it expanded its defense portfolio with a $6.9 million order from Australia’s Department of Defense for its DTIM (Detect, Track, Identify, and Mitigate) Single-Operator Counter-sUAS Kits.

Are ONDS Rivals Catching Up in the Drone Race?Kratos Defense (KTOS - Free Report) is the primary unmanned aerial target drone system provider for the U.S. Air Force, Navy, Army and several allied defense agencies. Recently, it supported the Missile Defense Agency and the Japan Maritime Self-Defense Force during the Japan Flight Test Experiment-01, providing target vehicles that enabled Japan’s next-generation SPY-7 radar to successfully detect, track and simulate missile engagements. Kratos also won a U.S. Army DEVCOM C5ISR contract to develop an upgraded seeker for the Javelin missile system. The next-generation infrared seeker will replace aging components, enhance targeting and effectiveness, and extend the weapon’s capabilities for the next decade.

Red Cat Holdings (RCAT - Free Report) is a direct competitor of Ondas in the drone market. RCAT reported strong second-quarter results, with revenue surging 527% to $20.2 million and gross margin improving to 16.1%. It advanced in the Drone Dominance program, expanded its air, land and maritime autonomy portfolio, acquired Quaze Technologies and strengthened its balance sheet with $325.6 million in cash. RCAT reaffirmed its $150–$180 million full-year revenue target. In July, RCAT’s Teal Drones won a $2.49 million U.S. Air Force contract to supply Black Widow drones, training, batteries and support for evaluation as a potential replacement for the Air Force’s current Teal 2 fleet.

ONDS’ Price Performance, Valuation and EstimatesShares of ONDS have jumped 32.8 % in the past month compared with the Zacks Wireless-National industry’s rise of 7%.

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In terms of the forward 12-month Price/Sales ratio, ONDS is trading at 6.67, lower than the industry’s multiple of 8.13.

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For ONDS, earnings estimates for the current year have been revised significantly downward in the past 60 days.

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ONDS currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Key Takeaways Kratos Defense gained 21.4% in three months, fueled by strength in unmanned systems and hypersonics.Valkyrie activity lifted Unmanned Systems revenues to $79.1 million, with backlog reaching $374.6 million.Supply-chain disruptions and rising costs could pressure margins and keep cash conversion below expectations. Kratos Defense & Security Solutions, Inc.’s (KTOS - Free Report) shares have risen 21.4% over the past three months compared with the Zacks Aerospace-Defense Equipment industry’s growth of 0.6%. The company maintains a leading position as the U.S. Army’s primary supplier of unmanned target drones, with sustained demand supported by ongoing U.S. defense spending.
 

Image Source: Zacks Investment Research

Other defense equipment stocks like Teledyne Technologies (TDY - Free Report) and AeroVironment (AVAV - Free Report) have also outperformed the industry in the said time frame. Teledyne Technologies and AeroVironment stocks have gained 7.2% and 21.8%, respectively. TDY’s long-term growth prospects remain bright on the back of rising global defense spending, increasing demand for advanced sensing and imaging technologies and healthy demand across marine, space and commercial aerospace end markets. AVAV is benefiting from military modernization and a pivot toward autonomous unmanned systems and counter-drone technology.

Considering Kratos Defense’s outperformance, investors might be left wondering if this is a good time to add KTOS stock to their portfolio. Let's examine the factors that contributed to the share price gain and assess the stock's investment prospects to make an informed decision.

Tailwinds for KTOS StockKratos Defense serves the defense industry with products spanning target drones, rocket systems and SRMs, hypersonic vehicles, jet engines for drones and missiles, and virtualized ground systems for satellites. In second-quarter 2026, consolidated bookings were $492.2 million, implying a 1.1 book-to-bill, while the last 12-month book-to-bill was 1.3. The bid and proposal pipeline rose to $15.0 billion as of June 28, 2026.

KTOS is the primary unmanned aerial target drone system provider for the U.S. Air Force, Navy, Army and several allied defense agencies. This position has led to multiple recent contracts and partnerships that are expanding its presence in the global UAS market, including activity tied to the XQ-58A Valkyrie. In second-quarter 2026, Unmanned Systems revenues increased to $79.1 million from $73.2 million a year earlier, driven primarily by Valkyrie-related activity. Bookings in the segment totaled $78.4 million in the quarter, implying a 1.0 book-to-bill, and backlog was $374.6 million as of June 28, 2026.

The company is also investing in facilities and programs intended to support future production and test needs, including its operational hypersonic payload integration facility in Indiana and additional engine, radar and missile initiatives. Management expects hypersonic revenues to increase from approximately $200 million in 2025 to approximately $400 million in 2026 and at least $700 million in 2027. The company is also procuring components for 3,000 Spartan turbojet engines expected to be produced for customers in 2027. The company plans to order components for an additional 5,000 engines scheduled for 2028.

Headwinds for KTOSKratos Defense continues to cite supply-chain disruptions and parts availability as industry issues that can delay material receipts and deliveries. Management’s 2026 outlook explicitly assumes potential manufacturing and supply-chain disruptions, parts shortages and continued cost increases. Inventoried costs increased to $235.9 million as of June 28, 2026, from $188.2 million as of 2025-end, consistent with larger lot purchases and long-lead items. Persistently higher input costs or further supply friction could pressure margins and keep cash conversion below investor expectations.

Estimates for KTOS StockThe Zacks Consensus Estimate for 2026 and 2027 earnings per share (EPS) indicates an increase of 49.09% and 36.59%, respectively, year over year. 
 

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for Teledyne Technologies’ 2026 and 2027 EPS implies an increase of 11.7% and 8.9%, respectively, year over year. The consensus estimate for AeroVironment’s fiscal 2027 EPS indicates a decrease of 1.5% year over year.  

KTOS’ Earnings Surprise HistoryThe company beat on earnings in each of the trailing four quarters, delivering an average surprise of 32.47%.

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KTOS’ Return on Equity Lower Than IndustryThe company’s trailing 12-month return on equity of 4.54% is lower than the industry average of 12.47%. Return on equity, a profitability measure, reflects how effectively a company utilizes its shareholders’ funds to generate income.

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KTOS Stock Trades at a DiscountIn terms of valuation, KTOS’ forward 12-month price/sales (P/S) is 5.87X, a discount to the industry’s average of 8.6X.

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What Should an Investor Do Now?Kratos Defense is strengthening its position in unmanned systems, hypersonics and propulsion, supported by rising defense demand and a strong pipeline of future opportunities. Growth in Valkyrie-related programs, hypersonic systems and engine production is expanding its addressable market and providing visibility for continued revenue growth.

Given its price performance, strong earnings growth and discounted valuation, one should consider including KTOS stock in their portfolios right now. KTOS has a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Key Takeaways KTOS raised full-year revenue guidance to $1.75B-$1.81B as Q2 revenues hit $458.8M with 19.1% organic growth.KTOS sees hypersonics revenues near $400M in 2026 and at least $700M in 2027 as new capacity comes online.KTOS ordered parts for 3,000 Spartan turbojets for 2027, plans 5,000 more for 2028, at about $50,000 each. Kratos Defense & Security Solutions, Inc. (KTOS - Free Report) used its second-quarter call to emphasize faster production growth in hypersonics, jet engines and unmanned systems, backed by new capacity and program funding.

President and CEO Eric DeMarco tied expansion projects to identified demand, while CFO Deanna Lund highlighted currency pressure and heavy investment as the main offsets to margin gains.

KTOS Raises the Second-Half Growth BarSecond-quarter adjusted earnings of $0.21 per share topped the Zacks Consensus Estimate of $0.13. Revenues came in at $458.8 million, which beat the $411.7 million consensus mark.

CFO Deanna Lund guided third-quarter revenues to $460-$480 million. Kratos also raised full-year revenue guidance to $1.75-$1.81 billion, with third-quarter organic growth projected at 19% to 25%.

President and CEO Eric DeMarco cited $1.99 billion of trailing-12-month bookings, a 1.3 book-to-bill ratio and a $15 billion bid-and-proposal pipeline as support for stronger second-half momentum.

Kratos Hypersonics Moves Into a Higher GearCEO DeMarco said hypersonics is tracking toward $400 million of 2026 revenues after about $200 million in 2025, with at least $700 million targeted for 2027.

A Jefferies analyst asked about the ramp-up. CFO Deanna Lund said third-quarter hypersonics revenues should rise $20 million to $25 million from the second quarter, with the fourth quarter up $20 million to as much as $30 million from second-quarter levels.

DeMarco said the Indiana integration facility is operational and the first of 120 previously ordered solid rocket motors should arrive in the third quarter. He also cited roughly $400 million of recent hypersonic and related funding.

KTOS Builds Ahead of the Jet Engine Ramp-UpDeMarco said Kratos has ordered components for 3,000 Spartan turbojets for 2027 and plans another 5,000 engines for 2028. The average selling price is about $50,000.

A JPMorgan analyst asked about timing. DeMarco said turbojets drive the 2027 step-up, while the 50-50 GE turbofan partnership is expected to enter low-rate initial production in 2028 after the Oklahoma BladeWorks facility opens in summer 2027.

A NOBLE Capital analyst pressed on supply-chain risk. DeMarco said Kratos is qualifying suppliers and backups, with redundancy and quality control central to meeting planned volumes.

Kratos Expands Valkyrie and Drone CapacityDeMarco said Kratos expects another Marine Corps Valkyrie order by year-end. The 2026 outlook includes about 10% organic growth for Unmanned Systems, supported by recent awards including Valkyrie.

A Baird analyst asked about Taiwan and capacity. DeMarco said Mighty Hornet customer flights could support production in the first half of 2027 if milestones are met, while Valkyrie output should average 1.5 aircraft per month during 2027.

DeMarco said longer-term Valkyrie capacity should reach 35 to 40 aircraft annually depending on configuration. To a Clear Street analyst, he put domestic Valkyrie EBITDA margins at 10% to 15% and international margins at 15% to 20%.

KTOS’ Margins Face Shekel and Investment DragCFO Lund called the Israeli shekel the largest margin headwind. She said it reduced second-quarter adjusted EBITDA by about $2.5 million and is expected to create a $5 million to $7 million full-year headwind.

Even so, Lund said Kratos still expects its 2026 adjusted EBITDA margin to improve about 100 basis points from 2025. Full-year adjusted EBITDA guidance is $173 million to $176 million.

Kratos forecasts $250 million to $275 million of 2026 investments, including $125 million to $135 million of capital expenditures. Free cash flow use is projected at $85 million to $105 million.

Kratos Keeps Focus on Funded Scale-UpDeMarco repeatedly emphasized that new facilities are tied to programs, partners, contracts or committed funding rather than speculative demand.

Management’s tone remained confident on hypersonics, engines, drones and space, while execution priorities centered on supplier readiness, production rates and converting funded opportunities into revenues.

KTOS’ Zacks Rank and Style Scores Signal CautionKTOS carries a Zacks Rank #4 (Sell), with a Value Score of F, Growth Score of D, Momentum Score of C and VGM Score of F. Zacks associates a poor Rank with declining earnings-estimate revisions and favors A or B Style Scores with a Zacks Rank #1 (Strong Buy) or #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The current combination sits outside that more favorable Rank-and-Style profile. The Zacks Rank can change as earnings estimates are revised after the just-reported results, so the reading remains a point-in-time signal.

Posted by Defense World Staff on Aug 6th, 2026

Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS – Get Free Report)’s stock price rose 6.7% during trading on Wednesday following a better than expected earnings announcement. The stock traded as high as $62.34 and last traded at $55.34. 9,159,451 shares changed hands during trading, an increase of 104% from the average session volume of 4,493,246 shares. The stock had previously closed at $51.87.

The aerospace company reported $0.21 EPS for the quarter, beating the consensus estimate of $0.14 by $0.07. The firm had revenue of $458.80 million for the quarter, compared to analysts’ expectations of $410.36 million. Kratos Defense & Security Solutions had a return on equity of 3.37% and a net margin of 2.03%.The firm’s revenue was up 30.5% compared to the same quarter last year. During the same period last year, the firm earned $0.11 EPS.

Kratos Defense & Security Solutions News Summary Here are the key news stories impacting Kratos Defense & Security Solutions this week:

Positive Sentiment: Second-quarter results beat expectations. Kratos reported adjusted earnings of $0.21 per share, up from $0.11 a year earlier and above the roughly $0.13-$0.14 consensus. Revenue rose 30.5% year over year to $458.8 million, exceeding estimates near $410 million. Kratos Reports Second Quarter 2026 Financial Results Positive Sentiment: Growth was broad-based. Kratos Government Solutions revenue increased 36.4% to $379.7 million, while Unmanned Systems revenue rose 8.1% to $79.1 million. Management cited demand across hypersonics, space, jet engines, counter-drone systems and unmanned aircraft, along with strong bookings. Kratos Defense Q2 Earnings and Revenues Outpace Estimates Positive Sentiment: Management raised its outlook. Full-year 2026 revenue guidance was lifted to approximately $1.8 billion, above the roughly $1.7 billion analyst consensus, with projected organic revenue growth of 19%-23%. Kratos also outlined plans to produce 3,000 Spartan engines in 2027. Kratos 2026 Organic Growth Forecast Positive Sentiment: Analyst sentiment improved. Piper Sandler upgraded KTOS, citing a buying opportunity, while BTIG raised its price target to $104 and maintained a Buy rating. The upgrades reinforce the view that the earnings beat and raised outlook may have been overly discounted by the market. Kratos Defense Upgraded at Piper Sandler Neutral Sentiment: Near-term guidance was roughly in line. Third-quarter revenue guidance of $460 million-$480 million brackets the $462.8 million consensus estimate, suggesting continued growth but limited immediate upside from the next-quarter forecast. Kratos Defense Rallies on Results and Upgrade Neutral Sentiment: Call-option activity was elevated, with 13,877 contracts purchased versus average daily volume of 10,153, indicating increased bullish speculation but not a fundamental change in the business. Negative Sentiment: Cantor Fitzgerald lowered its price target from $115 to $100, although it retained an Overweight rating. Kratos also continues to trade at a demanding valuation, making the stock sensitive to any slowdown in growth or execution. Analyst Upgrades and Downgrades A number of brokerages recently weighed in on KTOS. Canaccord Genuity Group set a $135.00 price objective on shares of Kratos Defense & Security Solutions in a research note on Wednesday. Cantor Fitzgerald decreased their target price on shares of Kratos Defense & Security Solutions from $115.00 to $100.00 and set an “overweight” rating for the company in a research report on Tuesday. BTIG Research raised their target price on shares of Kratos Defense & Security Solutions from $100.00 to $104.00 and gave the company a “buy” rating in a research note on Wednesday. Wedbush started coverage on shares of Kratos Defense & Security Solutions in a research report on Tuesday, June 30th. They set an “outperform” rating and a $85.00 price target on the stock. Finally, Weiss Ratings reaffirmed a “hold (c)” rating on shares of Kratos Defense & Security Solutions in a research note on Friday, July 17th. Three analysts have rated the stock with a Strong Buy rating, seventeen have assigned a Buy rating and three have issued a Hold rating to the stock. According to MarketBeat, Kratos Defense & Security Solutions has a consensus rating of “Buy” and a consensus target price of $102.41.

View Our Latest Report on Kratos Defense & Security Solutions

Insider Buying and Selling at Kratos Defense & Security Solutions In related news, CFO Deanna H. Lund sold 5,000 shares of the firm’s stock in a transaction that occurred on Monday, June 1st. The shares were sold at an average price of $63.74, for a total transaction of $318,700.00. Following the completion of the sale, the chief financial officer directly owned 290,161 shares in the company, valued at approximately $18,494,862.14. This trade represents a 1.69% decrease in their ownership of the stock. The sale was disclosed in a filing with the SEC, which is available at the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, insider Steven S. Fendley sold 35,000 shares of the stock in a transaction on Monday, June 8th. The shares were sold at an average price of $58.23, for a total value of $2,038,050.00. Following the completion of the transaction, the insider owned 309,087 shares of the company’s stock, valued at $17,998,136.01. This trade represents a 10.17% decrease in their position. The disclosure for this sale is available in the SEC filing. In the last quarter, insiders have sold 140,036 shares of company stock worth $7,810,417. Company insiders own 1.50% of the company’s stock.

Institutional Inflows and Outflows Hedge funds and other institutional investors have recently made changes to their positions in the company. Corient Private Wealth LLC boosted its position in shares of Kratos Defense & Security Solutions by 7,701.6% in the fourth quarter. Corient Private Wealth LLC now owns 1,593,549 shares of the aerospace company’s stock valued at $120,966,000 after acquiring an additional 1,573,123 shares during the period. Norges Bank bought a new position in Kratos Defense & Security Solutions during the fourth quarter worth $104,807,000. Goldman Sachs Group Inc. raised its stake in Kratos Defense & Security Solutions by 66.0% during the 4th quarter. Goldman Sachs Group Inc. now owns 1,398,525 shares of the aerospace company’s stock valued at $106,162,000 after purchasing an additional 556,036 shares during the last quarter. Clearbridge Investments LLC boosted its holdings in Kratos Defense & Security Solutions by 48.5% in the 4th quarter. Clearbridge Investments LLC now owns 1,458,084 shares of the aerospace company’s stock valued at $110,683,000 after purchasing an additional 476,049 shares during the period. Finally, FengHe Fund Management Pte. Ltd. bought a new stake in Kratos Defense & Security Solutions in the 4th quarter valued at $35,291,000. 75.92% of the stock is currently owned by institutional investors and hedge funds.

Kratos Defense & Security Solutions Stock Up 6.7% The firm’s 50-day simple moving average is $52.50 and its 200-day simple moving average is $71.15. The company has a debt-to-equity ratio of 0.04, a quick ratio of 5.08 and a current ratio of 5.63. The company has a market capitalization of $10.38 billion, a price-to-earnings ratio of 325.53 and a beta of 1.08.

Kratos Defense & Security Solutions Company Profile (Get Free Report)

Kratos Defense & Security Solutions, Inc (NASDAQ: KTOS) is a technology-driven company that specializes in national security and defense solutions for government and military customers. The firm’s core capabilities span unmanned systems, satellite communications, missile defense, cyber security, and directed-energy weapons. Through its integrated approach, Kratos delivers mission-critical products and services designed to enhance operational readiness and support force modernization initiatives.

In the unmanned systems arena, Kratos develops high-performance aerial platforms used as target drones, low-cost attritable aircraft and experimental stealth demonstrators.

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Posted by Defense World Staff on Aug 6th, 2026

Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS – Get Free Report) shares gapped up prior to trading on Wednesday following a better than expected earnings announcement. The stock had previously closed at $51.87, but opened at $58.87. Kratos Defense & Security Solutions shares last traded at $57.32, with a volume of 2,819,782 shares.

The aerospace company reported $0.21 earnings per share for the quarter, topping the consensus estimate of $0.14 by $0.07. The company had revenue of $458.80 million for the quarter, compared to the consensus estimate of $410.36 million. Kratos Defense & Security Solutions had a return on equity of 3.37% and a net margin of 2.03%.Kratos Defense & Security Solutions’s revenue was up 30.5% on a year-over-year basis. During the same quarter in the prior year, the business earned $0.11 EPS.

More Kratos Defense & Security Solutions News Here are the key news stories impacting Kratos Defense & Security Solutions this week:

Positive Sentiment: Second-quarter results beat expectations. Kratos reported adjusted earnings of $0.21 per share, up from $0.11 a year earlier and above the roughly $0.13-$0.14 consensus. Revenue rose 30.5% year over year to $458.8 million, exceeding estimates near $410 million. Kratos Reports Second Quarter 2026 Financial Results Positive Sentiment: Growth was broad-based. Kratos Government Solutions revenue increased 36.4% to $379.7 million, while Unmanned Systems revenue rose 8.1% to $79.1 million. Management cited demand across hypersonics, space, jet engines, counter-drone systems and unmanned aircraft, along with strong bookings. Kratos Defense Q2 Earnings and Revenues Outpace Estimates Positive Sentiment: Management raised its outlook. Full-year 2026 revenue guidance was lifted to approximately $1.8 billion, above the roughly $1.7 billion analyst consensus, with projected organic revenue growth of 19%-23%. Kratos also outlined plans to produce 3,000 Spartan engines in 2027. Kratos 2026 Organic Growth Forecast Positive Sentiment: Analyst sentiment improved. Piper Sandler upgraded KTOS, citing a buying opportunity, while BTIG raised its price target to $104 and maintained a Buy rating. The upgrades reinforce the view that the earnings beat and raised outlook may have been overly discounted by the market. Kratos Defense Upgraded at Piper Sandler Neutral Sentiment: Near-term guidance was roughly in line. Third-quarter revenue guidance of $460 million-$480 million brackets the $462.8 million consensus estimate, suggesting continued growth but limited immediate upside from the next-quarter forecast. Kratos Defense Rallies on Results and Upgrade Neutral Sentiment: Call-option activity was elevated, with 13,877 contracts purchased versus average daily volume of 10,153, indicating increased bullish speculation but not a fundamental change in the business. Negative Sentiment: Cantor Fitzgerald lowered its price target from $115 to $100, although it retained an Overweight rating. Kratos also continues to trade at a demanding valuation, making the stock sensitive to any slowdown in growth or execution. Analysts Set New Price Targets Several research analysts have commented on the stock. Royal Bank Of Canada dropped their price objective on shares of Kratos Defense & Security Solutions from $100.00 to $80.00 and set an “outperform” rating on the stock in a research report on Thursday, May 7th. Piper Sandler raised shares of Kratos Defense & Security Solutions from a “neutral” rating to an “overweight” rating and set a $75.00 price objective for the company in a research report on Wednesday. Weiss Ratings reiterated a “hold (c)” rating on shares of Kratos Defense & Security Solutions in a research note on Friday, July 17th. Cantor Fitzgerald dropped their target price on Kratos Defense & Security Solutions from $115.00 to $100.00 and set an “overweight” rating on the stock in a report on Tuesday. Finally, The Goldman Sachs Group cut their price target on Kratos Defense & Security Solutions from $100.00 to $89.00 and set a “buy” rating on the stock in a research note on Tuesday, July 14th. Three investment analysts have rated the stock with a Strong Buy rating, seventeen have issued a Buy rating and three have given a Hold rating to the company. Based on data from MarketBeat, the company has a consensus rating of “Buy” and an average price target of $102.41.

Check Out Our Latest Report on Kratos Defense & Security Solutions

Insider Activity at Kratos Defense & Security Solutions In other Kratos Defense & Security Solutions news, CFO Deanna H. Lund sold 5,000 shares of the firm’s stock in a transaction that occurred on Monday, June 1st. The shares were sold at an average price of $63.74, for a total transaction of $318,700.00. Following the sale, the chief financial officer owned 290,161 shares of the company’s stock, valued at approximately $18,494,862.14. This trade represents a 1.69% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which can be accessed through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, insider Steven S. Fendley sold 35,000 shares of the business’s stock in a transaction that occurred on Monday, June 8th. The stock was sold at an average price of $58.23, for a total transaction of $2,038,050.00. Following the sale, the insider owned 309,087 shares of the company’s stock, valued at $17,998,136.01. This represents a 10.17% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. Over the last three months, insiders have sold 140,036 shares of company stock valued at $7,810,417. Company insiders own 1.50% of the company’s stock.

Hedge Funds Weigh In On Kratos Defense & Security Solutions Several large investors have recently bought and sold shares of KTOS. Harbor Investment Advisory LLC acquired a new stake in shares of Kratos Defense & Security Solutions during the second quarter worth about $25,000. Mcguire Capital Advisors Inc. acquired a new stake in shares of Kratos Defense & Security Solutions in the 4th quarter valued at about $25,000. Atlantic Union Bankshares Corp boosted its position in shares of Kratos Defense & Security Solutions by 7,600.0% in the 4th quarter. Atlantic Union Bankshares Corp now owns 385 shares of the aerospace company’s stock valued at $29,000 after purchasing an additional 380 shares during the period. Vision Retirement LLC grew its stake in Kratos Defense & Security Solutions by 288.2% during the 1st quarter. Vision Retirement LLC now owns 427 shares of the aerospace company’s stock worth $30,000 after buying an additional 317 shares during the last quarter. Finally, Rakuten Securities Inc. purchased a new position in Kratos Defense & Security Solutions during the 2nd quarter worth approximately $31,000. Institutional investors and hedge funds own 75.92% of the company’s stock.

Kratos Defense & Security Solutions Stock Performance The company has a market cap of $10.38 billion, a price-to-earnings ratio of 325.53 and a beta of 1.08. The firm has a 50-day simple moving average of $52.50 and a 200 day simple moving average of $71.15. The company has a quick ratio of 5.08, a current ratio of 5.63 and a debt-to-equity ratio of 0.04.

About Kratos Defense & Security Solutions (Get Free Report)

Kratos Defense & Security Solutions, Inc (NASDAQ: KTOS) is a technology-driven company that specializes in national security and defense solutions for government and military customers. The firm’s core capabilities span unmanned systems, satellite communications, missile defense, cyber security, and directed-energy weapons. Through its integrated approach, Kratos delivers mission-critical products and services designed to enhance operational readiness and support force modernization initiatives.

In the unmanned systems arena, Kratos develops high-performance aerial platforms used as target drones, low-cost attritable aircraft and experimental stealth demonstrators.

See Also Five stocks we like better than Kratos Defense & Security Solutions SpaceX: Love the Company, But the Stock Is a Harder Call Ulta’s Growth Is Real, But So Are the Risks BWX Technologies Is Turning the AI Power Problem Into a Nuclear Growth Story Meta’s Earnings Drop Shows Wall Street Wants More Than Ad Growth Receive News & Ratings for Kratos Defense & Security Solutions Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Kratos Defense & Security Solutions and related companies with MarketBeat.com's FREE daily email newsletter.

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Kratos Defense & Security Solutions (KTOS +5.19%) stock jumped 6.7% through 11:15 a.m. ET Wednesday after rushing right past analyst earnings forecasts last night.

Heading into the report, Wall Street had Kratos pegged for a $0.13 per share profit on $410.4 million in sales. In fact, Kratos earned $0.21 per share on sales of $458.8 million.

Image source: Getty Images.

Kratos Q2 earnings by the numbers Kratos grew its sales by 30% year over year, with 19% organic growth. Curiously for a company that's best known as a drone stock, most of this growth came through Kratos's government solutions business, which provides satellite communications and intelligence services, electronics, and training systems -- rather than the drones unit (called "unmanned systems").

Drones revenue increased only 8%.

The other interesting part of Kratos's report is that the $0.21 "profit" that got investors so excited today was, in fact, only a pro forma, non-GAAP profit. Actual earnings for the quarter when calculated under generally accepted accounting principles (GAAP) was only $0.02 per share -- flat against one year ago.

Today's Change

(

5.19

%) $

2.69

Current Price

$

54.56

What does this mean for Kratos stock? And this news gets worse. While Kratos was at least profitable -- if much less profitable than at first appeared -- free cash flow at the defense stock actually ran negative. Indeed, with more than $75 million in cash burned in just the first six months of this year, Kratos is on course to burn $150 million in 2026.

The good news is that as the company converts manufactured products into cash, Kratos expects to be able to correct course and burn significantly less cash as the year progresses -- perhaps as little as $85 million. Even if it succeeds at that, though, I can't see myself investing in this barely profitable stock until FCF turns positive.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Kratos Defense & Security Solutions. The Motley Fool has a disclosure policy.

Kratos Defense & Security Solutions, Inc. (KTOS) Q2 2026 Earnings Call Transcript

Kratos (KTOS - Free Report) reported $458.8 million in revenue for the quarter ended June 2026, representing a year-over-year increase of 30.5%. EPS of $0.21 for the same period compares to $0.11 a year ago.

The reported revenue compares to the Zacks Consensus Estimate of $411.69 million, representing a surprise of +11.44%. The company delivered an EPS surprise of +61.54%, with the consensus EPS estimate being $0.13.

While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectations to determine their next course of action, some key metrics always provide a better insight into a company's underlying performance.

As these metrics influence top- and bottom-line performance, comparing them to the year-ago numbers and what analysts estimated helps investors project a stock's price performance more accurately.

Here is how Kratos performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts:

Revenues- Product sales: $289.1 million compared to the $260.61 million average estimate based on four analysts. The reported number represents a change of +33.5% year over year.Revenues- Service revenues: $169.7 million versus $153.87 million estimated by four analysts on average. Compared to the year-ago quarter, this number represents a +25.8% change.Revenues- Kratos Government Solutions: $379.7 million versus the three-analyst average estimate of $342.22 million. The reported number represents a year-over-year change of +36.4%.Revenues- Unmanned Systems: $79.1 million compared to the $75.49 million average estimate based on three analysts. The reported number represents a change of +8.1% year over year.Gross Profit- Product sales: $62 million versus the four-analyst average estimate of $54.29 million.Gross Profit- Service revenues: $38.1 million versus $42.44 million estimated by four analysts on average.View all Key Company Metrics for Kratos here>>>

Shares of Kratos have returned -8.1% over the past month versus the Zacks S&P 500 composite's +1.7% change. The stock currently has a Zacks Rank #4 (Sell), indicating that it could underperform the broader market in the near term.

Second Quarter 2026 Revenues of $458.8 Million Reflect 19.1 Percent Organic Growth and 30.5 Percent Growth Over Second Quarter 2025 Revenues of $351.5 Million

Kratos Government Solutions Second Quarter 2026 Revenues of $379.7 Million Reflect 22.0 Percent Organic Growth and 36.4 Percent Growth Over Second Quarter 2025 Revenues of $278.3 Million

Unmanned Systems Second Quarter 2026 Revenues of $79.1 Million Reflect 8.1 Percent Organic Growth Over Second Quarter 2025 Revenues of $73.2 Million

Second Quarter 2026 Consolidated Book to Bill Ratio of 1.1 to 1 and Bookings of $492.2 Million

Last Twelve Months Ended June 28, 2026, Consolidated Book to Bill Ratio of 1.3 to 1 and Bookings of $1.990 Billion

Increases Full Year 2026 Revenue Guidance to $1.750 to $1.810 Billion, With Forecasted Organic Revenue Growth of Approximately 18 Percent to 23 Percent as Compared to Full Year 2025

SAN DIEGO,Calif., Aug. 04, 2026 (GLOBE NEWSWIRE) -- Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS), a leader in defense, national security and global markets, today reported its second quarter 2026 financial results, including Revenues of $458.8 million, Operating Loss of $1.6 million, Net Income of $4.4 million, Adjusted EBITDA of $38.2 million and a consolidated book to bill ratio of 1.1 to 1.0.

Second quarter 2026 Net Income and Operating Income includes non-cash stock compensation expense of $16.3 million, Company-funded Research and Development (R&D) expense of $13.6 million, including efforts in our Space, Satellite, Unmanned Systems and Microwave Electronic businesses, and non-cash amortization expense of $12.5 million.

Kratos reported in the second quarter 2026 GAAP Net Income of $4.4 million and GAAP Net Income per share of $0.02, compared to GAAP Net Income of $2.9 million and GAAP Net Income per share of $0.02, for the second quarter of 2025. Adjusted earnings per share (EPS) were $0.21 for the second quarter of 2026, compared to $0.11 for the second quarter of 2025.

Second quarter 2026 Revenues of $458.8 million increased $107.3 million, reflecting 30.5 percent growth and 19.1 percent organic growth from second quarter 2025 Revenues of $351.5 million. Organic revenue growth was reported in our Unmanned Systems (KUS) segment of 8.1 percent and in our Government Solutions (KGS) segment of 22.0 percent. The most notable growth in our KGS Segment was in our Defense Rocket Systems, Turbine Technologies, Microwave Products and Space, Training and Cyber businesses, with organic revenue growth rates of 50.2 percent, 43.3 percent, 29.5 percent and 8.7 percent, respectively, compared to the second quarter of 2025.

Second quarter 2026 Cash Flow Used in Operations was $11.0 million, primarily reflecting the working capital requirements related to the 30.5 percent revenue growth impacting our receivables, and also including increases in inventory balances related to ramps in production and investments we are making related to certain development initiatives. Free Cash Flow Used in Operations for the second quarter of 2026 was $18.9 million after funding $17.2 million of capital expenditures, and net of cash received of $9.3 million for the sale of company-owned Valkyries.

For the second quarter of 2026, KUS generated Revenues of $79.1 million, compared to $73.2 million in the second quarter of 2025, with the increase primarily driven by Valkyrie-related activity. KUS’s Operating Income was $1.2 million in the second quarter of 2026, compared to an Operating Loss of $0.3 million in the second quarter of 2025. KUS’s Adjusted EBITDA for the second quarter of 2026 was $5.1 million, compared to $3.6 million for the second quarter of 2025, reflecting the impact of the revenue volume and mix. KUS’s book-to-bill ratio for the second quarter of 2026 was 1.0 to 1.0 and 1.1 to 1.0 for the twelve months ended June 28, 2026, with bookings of $78.4 million for the three months ended June 28, 2026, and bookings of $354.4 million for the twelve months ended June 28, 2026. Total backlog for KUS at the end of the second quarter of 2026 was $374.6 million, compared to $375.4 million at the end of the first quarter of 2026.

For the second quarter of 2026, our KGS segment Revenues of $379.7 million increased from Revenues of $278.3 million in the second quarter of 2025, reflecting a 36.4 percent increase and a 22.0 percent organic growth rate, excluding the impact of the Nomad Global Communication Solutions (Nomad) and Orbit Technologies Ltd (Orbit) acquisitions. The increased Revenues includes organic revenue growth across our Defense and Rocket Support business, Turbine Technologies, Microwave Products and Space, Training and Cyber businesses, with organic revenue growth rates of 50.2 percent, 43.3 percent, 29.5 percent and 8.7 percent, respectively, over the second quarter of 2025.

KGS reported Operating Income of $14.3 million in the second quarter of 2026 compared to $12.6 million in the second quarter of 2025, primarily reflecting increased volume and mix in revenues. Second quarter 2026 KGS Adjusted EBITDA was $33.1 million, compared to second quarter 2025 KGS Adjusted EBITDA of $24.7 million, primarily reflecting the volume and mix in revenues and resources.

KGS reported a book-to-bill ratio of 1.1 to 1.0 for the second quarter of 2026, a book-to-bill ratio of 1.4 to 1.0 for the last twelve months ended June 28, 2026, and bookings of $413.8 million and $1.636 billion for the three and last twelve months ended June 28, 2026, respectively. KGS’s total backlog was $1.710 billion at the end of the second quarter of 2026, compared to $1.676 billion at the end of the first quarter of 2026.

Kratos reported consolidated bookings of $492.2 million and a book-to-bill ratio of 1.1 to 1.0 for the second quarter of 2026, and consolidated bookings of $1.990 billion and a book-to-bill ratio of 1.3 to 1.0 for the last twelve months ended June 28, 2026. Consolidated backlog was $2.084 billion on June 28, 2026, as compared to $2.051 billion on March 29, 2026. Kratos’ bid and proposal pipeline was $15.0 billion at June 28, 2026, as compared to $14.3 billion on March 29, 2026. Backlog on June 28, 2026, included funded backlog of $1.572 billion and unfunded backlog of $512.7 million.

Eric DeMarco, Kratos’ President and CEO, said, “Kratos’ second quarter results are reflective of the execution of the Kratos team and that our strategy, including making internally funded investments to be first-to-market with relevant hardware and software, that is engineered up front for affordable mass production, at scale, is aligned with the Department of War’s priorities. Representative of this alignment is Kratos’ last 12 month book-to-bill ratio of 1.3 to 1.0, the number of opportunities for Kratos continuing to increase as evidenced in our bid and proposal pipeline of $15 billion, and our business momentum expected to accelerate in the second half of 2026 and into 2027.”

Mr. DeMarco continued, “Kratos’ second quarter year over year organic growth rate was 19.1 percent, we are now forecasting third quarter organic growth of approximately 19 percent to 25 percent, and for fourth quarter organic growth of approximately 19 percent to 31 percent.   As a result, we have increased our full year 2026 organic revenue growth forecast up to approximately 18 percent to 23 percent as compared to full year 2025, which now also includes an expectation of approximately 10 percent organic growth for our Unmanned Systems business based upon recent contract awards, including Valkyrie.”

Mr. DeMarco concluded, “Kratos’ EBITDA margins are also increasing, and are forecast to continue to increase in the second half of 2026 and into 2027, as the business scales, production increases and we realize financial leverage on our fixed cost infrastructure. We are generating and forecasting for increased margins irrespective of increased costs as we pursue large new opportunities with the Department of War and the strength of the Shekel adversely impacting our Israel operations profitability, where we now have over 700 personnel. Expected future growth areas for Kratos include; hypersonic and rocket systems, missiles, jet engines, space and satellite communications.”

Financial Guidance

We are providing our initial third quarter guidance and increasing our full year 2026 Revenue guidance and tightening our Adjusted EBITDA guidance, and our assumptions, including as related to: current forecasted business mix, expected employee sourcing, hiring and retention; potential manufacturing, production and supply chain disruptions; potential parts shortages and related continued significant cost and price increases in each of these areas, which are impacting the industry and Kratos. We continue to make significant investments in bid, proposal and other new program opportunity areas, and increasing staffing to enable us to ramp production levels, all of which is currently adversely impacting our profit margins and free cash flow generation. We are also making significant investments in inventory, property, plant, equipment and facilities, consistent with the Department of War’s National Security Strategy and its stated expectations of U.S. National Security government contractors. These investments are expected to continue at least into Kratos’ fiscal year 2027, as our opportunity pipeline continues to increase.

Kratos’ revised cash flow guidance also assumes certain investments in our Rocket Systems and Unmanned Systems businesses, related to the procurement of rocket motors and related systems, and has been updated to include the working capital requirements related to the procurement of the materials and equipment in the third and fourth quarters to ramp our production of jet engines to 3,000 in 2027 to address the demand for engines for small cruise missiles, and our plan to begin producing approximately 40 Valkyries annually beginning by the beginning of 2028, as well as the completion of certain of our unmanned systems and related derivatives and vehicles. Additional forecasted investments in 2026 include our funding of the Prometheus joint venture, our Anaconda radar program, our Helios hypersonic and arc chamber program, our Indiana hypersonic integration facility, our Birmingham advanced manufacturing facility for hypersonic systems, expansion and new microwave electronics facilities in Israel and the U.S., our GEK and BladeWorks engine facilities, the continued build of our second lot of 12 Valkyrie aircraft, certain manufacturing and production related equipment for our recently acquired Nomad acquisition, certain drone-related investments, and our Vulcan, Kraken, Elysium, Nemesis, Hermes and other initiatives. The revised forecast for our estimated FY26 capital expenditure spend includes the shift in timing of construction and procurement of related machinery and equipment, to remove certain expenditures which are now funded under customer contract, and a shift in classification of investments for various drone opportunities which will be classified as a use of working capital in our Operating Cash Flow as work in process rather than capital expenditures when incurred. In summary, Kratos continues to make the required investments to support the rebuild of the U.S. defense industrial base and related infrastructure consistent with the Department of War’s direction, take advantage of the ongoing generational recapitalization of strategic and other weapon and National Security related systems, and generate value for all Kratos stakeholders, including the warfighter and Kratos shareholders.

   $MQ326FY26   Revenues$460 - $480$1,750 - $1,810R&D$13 - $15$50 - $53Operating Income$1 - $4$16 - $22Depreciation$11 - $12$48 - $50Amortization$12 - $13$43 - $46Stock Based Compensation$16 - $17$60 - $64Adjusted EBITDA$40 - $45$173 - $176   Operating Cash Flow $30 - $50Capital Expenditures $125 - $135Free Cash Flow Use ($85 - $105)    FY26 Forecasted Investments for New Program and Opportunities ($M)Capital ExpendituresEstimated Spend Program/Opportunity      Advanced Manufacturing Facility for Hypersonics/Engines & Test Cell$4-$5 Various Customer OpportunitiesPayload Integration Facility$4-$5 MACH-TB and OtherNomad Plant Improvements and Machinery$8 $9 Various Customer OpportunitiesC5ISR Facility and Machinery$3-$5 Various Air Defense ProgramsBladeWorks Turbo Fan Facility and Test Cells and New Designs$18-$19 Various Engine OpportunitiesMicrowave Products New/Expanded Facilities and Machinery$14-$15 Various Customer OpportunitiesSpace and Satellite Additional Secure Facility Build-Out$7-$8 Various Confidential ProgramsValkyrie Second Production Lot 12 Build$23-$24 Various Customer Opportunities $81-$90  Normal Maintenance Capital Expenditures$44-$45  Total FY26 Forecasted Capital Expenditures$125-$135        Other Investments included in Working Capital (Operating Cash Flow)     Rocket System Inventory Build - Zeus/Oriole$40 $45 Various including MACH-TBMaterials and Hardware$13 $14 Various Drone OpportunitiesInventory Purchases for Small Jet Engine Production$19 $21 Various Jet Engine Cruise Missile Opportunities     to enable production of 3,000 Jet Engines in 2027Unmanned Systems Initiative/Enhancements3 5 Various Customer Opportunities $75 $85  Estimated Funding for Investments     Funding Investment in Prometheus$50 $55  Total FY26 Forecasted Total Investments$250 $275               We expect our second half of fiscal 2026 will have significantly higher Revenue than the first half, as we expect to begin to receive in the second half of 2026 certain long-lead time items related to existing customer funded programs, including solid rocket motors and other hardware related to certain hypersonic and other programs, hardware and components related to jet engine and propulsion system development and production, and hardware related to air defense, missile, radar and other National Security system production. We expect our third quarter Revenues to grow organically 19 to 25 percent from third quarter 2025, with forecasted margin expansion in the third quarter tempered somewhat by increased business development and proposal costs to support the forecasted revenue growth, as well as continued negative foreign currency impacts on our Microwave Products Israeli business, which is adversely impacted by the strength of the Israeli Shekel vs. the US Dollar.

We expect Kratos’ second half of fiscal 2026 Adjusted EBITDA to be greater than our first half as our Revenue increases and Adjusted EBITDA margins expand and are impacted by both expected increased scale and product mix, and customer contract funding is expected to increase coming off of the late 2025 and early 2026 U.S. Government shutdown and extended Continuing Resolution. We continue to expect Kratos’ full year 2026 Adjusted EBITDA margin rates to be approximately 100 bps greater than our reported 2025 Adjusted EBITDA margin rates.

We expect to provide our initial full year 2027 financial guidance when we report our third quarter of fiscal 2026 later this year. We continue to expect our 2027 Adjusted EBITDA margin rates to increase an additional 100 bps above forecast 2026 Adjusted EBITDA margin rates, when we provide full year 2027 guidance later this year.

Management will discuss the Company’s financial results at a conference call beginning at 2:00 p.m. Pacific (5:00 p.m. Eastern) today. The call will be available at www.kratosdefense.com. Participants may register for the call using this On-line Form. Upon registration, all telephone participants will receive the dial-in number along with a unique PIN that can be used to access the call. For those who cannot access the live broadcast, a replay will be available on Kratos’ website.

About Kratos Defense & Security Solutions

Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) is a technology, hardware, products, system and software company addressing the defense, national security, and commercial markets. Kratos makes true internally funded research, development, capital and other investments, to rapidly develop, produce and field relevant solutions that address our customers’ mission critical needs and requirements. At Kratos, affordability is a technology, and we seek to utilize proven, leading-edge approaches and technology, not unproven bleeding edge approaches or technology, with Kratos’ approach designed to reduce cost, schedule and risk, enabling us to be first to market with cost effective solutions. We believe that Kratos is known as the innovative disruptive change agent in the industry, a company that is an expert in designing products and systems up front for successful rapid, large quantity, low-cost future manufacturing, which is a value-add competitive differentiator for our large traditional prime system integrator partners and also to our government and commercial customers. Kratos intends to pursue program and contract opportunities as the prime or lead contractor when we believe our probability of win is high and any investment required by Kratos is within our capital resource comfort level. We intend to partner and team with a large, traditional system integrator when our assessment of probability of win is greater or required investment is beyond Kratos’ comfort level. Kratos’ primary business areas include, virtualized ground systems for satellites and space vehicles including software for command & control (C2) and telemetry, tracking and control (TT&C), jet powered unmanned aerial drone systems, hypersonic vehicles and rocket systems, propulsion systems for drones, missiles, loitering munitions, supersonic systems, space craft and launch systems, command, control, communication, computing, combat, intelligence surveillance and reconnaissance (C5ISR) and microwave electronic products for missile, radar, air defense, missile defense, space, satellite, counter unmanned aircraft systems (CUAS), directed energy, communication and other systems, and virtual & augmented reality training systems for the warfighter. For more information, visit www.KratosDefense.com and follow Kratos on LinkedIn and X.

Notice Regarding Forward-Looking Statements
This news release contains certain forward-looking statements that involve risks and uncertainties, including, without limitation, express or implied statements concerning the Company’s expectations regarding its future financial performance, including the Company’s expectations for its third quarter, second half, and full year 2026 revenues, R&D, operating income, depreciation, amortization, stock based compensation expense, and Adjusted EBITDA, and full year 2026 operating cash flow, capital expenditures, investments, and free cash flow, forecasted company and business unit organic revenue growth, estimated revenue and organic revenue growth for 2026 and 2027, Adjusted EBITDA margins in 2026 and 2027, future initiation of higher margin programs and negotiation of lower margin contracts which are expected to be renewed in the future, expected future investments in property, plant, facilities, and equipment (including expected investments in the Prometheus joint venture and other programs, opportunities, and initiatives), expected future production of Valkyries, the ability of the Company’s customers to respond to industry and market conditions, the impact of acquired companies and businesses on the Company’s operations and financial condition, the Company’s bid and proposal pipeline and backlog, including the Company’s ability to timely execute on its backlog, demand for its products and services, including the Company’s alignment with today’s National Security requirements and the positioning of its C5ISR and other businesses, ability to successfully compete and expected new customer awards, the impact of federal government shutdowns on the Company’s operations and financial condition, the availability and timing of government funding for the Company’s offerings, availability of an experienced skilled workforce, inflation and increased costs, risks related to potential cybersecurity events or disruptions of our information technology systems, and delays in our financial projections, industry, business and operations, including projected growth. Such statements are only predictions, and the Company’s actual results may differ materially from the results expressed or implied by these statements. Investors are cautioned not to place undue reliance on any such forward-looking statements. All such forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update or revise these statements, whether as a result of new information, future events or otherwise. Factors that may cause the Company’s results to differ include, but are not limited to: risks to our business and financial results related to the reductions and other spending constraints imposed on the U.S. Government and our other customers, including as a result of sequestration and extended continuing resolutions, the Federal budget deficit and Federal government shut-downs; risks of adverse regulatory action or litigation; risks associated with debt leverage; risks that our cost-cutting initiatives will not provide the anticipated benefits; risks that changes, cutbacks or delays in spending by the DoW may occur, which could cause delays or cancellations of key government contracts; risks of delays to or the cancellation of our projects as a result of protest actions submitted by our competitors; risks that changes may occur in Federal government (or other applicable) procurement laws, regulations, policies and budgets; risks of the availability of government funding for the Company's products and services due to performance, cost growth, or other factors, changes in government and customer priorities and requirements (including cost-cutting initiatives, the potential deferral of awards, terminations or reduction of expenditures to respond to the priorities of Congress and the Administration, or budgetary cuts resulting from Congressional committee recommendations or automatic sequestration under the Budget Control Act of 2011, as amended); risks related to tariffs or import duties which could affect the Company’s supply chain and customer affordability; risks related to Executive Orders issued by the Trump Administration and resultant changes to the DoW procurement policies and Federal Acquisition Regulations; risks related to DoW reorganization and DOGE; risks that the unmanned aerial systems and unmanned ground sensor markets do not experience significant growth; risks that products we have developed or will develop will not become programs of record; risks that we cannot expand our customer base or that our products do not achieve broad acceptance which could impact our ability to achieve our anticipated level of growth; risks of increases in the Federal government initiatives related to in-sourcing; risks related to security breaches, including cyber security attacks and threats or other significant disruptions of our information systems, facilities and infrastructures; risks related to our compliance with applicable contracting and procurement laws, regulations and standards; risks related to the new DoW Cybersecurity Maturity Model Certification; risks relating to the ongoing conflict in Ukraine and the Israeli-Palestinian military conflict; risks to our business in Israel including our expanded operations in Israel following the Orbit acquisition; risks related to contract performance; risks related to failure of our products or services; risks associated with our subcontractors’ or suppliers’ failure to perform their contractual obligations, including the appearance of counterfeit or corrupt parts in our products; changes in the competitive environment (including as a result of bid protests); failure to successfully integrate acquired operations and compete in the marketplace, which could reduce revenues and profit margins; risks that potential future goodwill impairments will adversely affect our operating results; risks that anticipated tax benefits will not be realized in accordance with our expectations; risks that a change in ownership of our stock could cause further limitation to the future utilization of our net operating losses; risks that we may be required to record valuation allowances on our net operating losses which could adversely impact our profitability and financial condition; risks that the current economic environment will adversely impact our business, including with respect to our ability to recruit and retain sufficient numbers of qualified personnel to execute on our programs and contracts, as well as expected contract awards and risks related to increasing interest rates; currently unforeseen risks associated with any public health crisis, and risks related to natural disasters or severe weather. These and other risk factors are more fully discussed in the Company’s Annual Report on Form 10-K for the period ended December 28, 2025, and in our other filings made with the Securities and Exchange Commission.

Note Regarding Use of Non-GAAP Financial Measures and Other Performance Metrics
This news release contains non-GAAP financial measures, including organic revenue growth rates computed as the revenue growth rate excluding the current year impact of the contribution from acquisitions, Adjusted EPS (computed using income before income taxes, excluding depreciation, amortization of intangible assets, amortization of capitalized contract and development costs, stock-based compensation expense, acquisition and restructuring related items and other, which includes, but is not limited to, legal related items, non-recoverable rates and costs, and foreign transaction gains and losses, less the estimated impact of current and deferred income taxes) and Adjusted EBITDA (which excludes, among other things, acquisition and restructuring related items, stock compensation expense, foreign transaction gains and losses, and the associated margin rates). Additional non-GAAP financial measures include Free Cash Flow from Operations computed as Cash Flow from Operations less Capital Expenditures plus proceeds from sale of assets and Adjusted EBITDA related to our KUS and KGS businesses. Kratos believes this information is useful to investors because it provides a basis for measuring the Company’s available capital resources, the actual and forecasted operating performance of the Company’s business and the Company’s cash flow, excluding non-recurring items and non-cash items that would normally be included in the most directly comparable measures calculated and presented in accordance with GAAP. The Company’s management uses these non-GAAP financial measures, along with the most directly comparable GAAP financial measures, in evaluating the Company’s actual and forecasted operating performance, capital resources and cash flow. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and investors should carefully evaluate the Company’s financial results calculated in accordance with GAAP and reconciliations to those financial results. In addition, non-GAAP financial measures as reported by the Company may not be comparable to similarly titled amounts reported by other companies. As appropriate, the most directly comparable GAAP financial measures and information reconciling these non-GAAP financial measures to the Company’s financial results prepared in accordance with GAAP are included in this news release.

Another Performance Metric the Company believes is a key performance indicator in our industry is our Book to Bill Ratio as it provides investors with a measure of the amount of bookings or contract awards as compared to the amount of revenues that have been recorded during the period and provides an indicator of how much of the Company’s backlog is being burned or utilized in a certain period. The Book to Bill Ratio is computed as the number of bookings or contract awards in the period divided by the revenues recorded for the same period. The Company believes that the rolling or last twelve months’ Book to Bill Ratio is meaningful since the timing of quarter-to-quarter bookings can vary.

Press Contact:
Claire Cantrell
[email protected]

Investor Information:
877-934-4687
[email protected]

        Kratos Defense & Security Solutions, Inc.
Unaudited Condensed Consolidated Statements of Operations
(in millions, except per share data)         Three Months Ended
 Six Months Ended
 June 28,  June 29,  June 28,  June 29,  2026  2025  2026  2025 Service revenues$169.7  $134.9  $303.7  $237.3 Product sales289.1  216.6  526.1  416.8 Total revenues458.8  351.5  829.8  654.1 Cost of service revenues131.6  107.2  230.9  182.9 Cost of product sales227.1  170.5  409.2  323.8 Total costs358.7  277.7  640.1  506.7 Gross profit - service revenues38.1  27.7  72.8  54.4 Gross profit - product sales62.0  46.1  116.9  93.0 Total gross profit100.1  73.8  189.7  147.4             Selling, general and administrative expenses73.3  54.1  136.0  106.4 Merger and acquisition expenses0.8  -  2.7  - Research and development expenses13.6  10.2  24.3  20.2 Depreciation3.9  3.0  7.7  5.6 Amortization of intangible assets10.1  2.8  15.9  4.9 Operating income (loss)(1.6) 3.7  3.1  10.3 Interest income (expense), net10.2  (1.2) 14.7  (2.1)Other income (loss), net(1.6) 2.1  (1.0) 1.8 Income before income taxes7.0  4.6  16.8  10.0 Provision for income taxes2.6  1.7  0.5  2.6 Net Income$4.4  $2.9  $16.3  $7.4             Basic income per common share$0.02  $0.02  $0.09  $0.05 Diluted income per common share$0.02  $0.02  $0.09  $0.05             Weighted average common shares outstanding:           Basic188.6  155.7  182.7  154.9 Diluted190.1  157.4  184.8  156.9             Adjusted EBITDA (1)$38.2  $28.3  $76.9  $55.0                          Unaudited Reconciliation of GAAP to Non-GAAP Measures

Note: (1) Adjusted EBITDA is a non-GAAP measure defined as GAAP net income adjusted for net interest income (expense), provision for income taxes, depreciation and amortization expense of intangible assets, amortization of capitalized contract and development costs, stock-based compensation, acquisition and restructuring related items and other, and foreign transaction (gain) loss.

Adjusted EBITDA as calculated by us may be calculated differently than Adjusted EBITDA for other companies. We have provided Adjusted EBITDA because we believe it is a commonly used measure of financial performance in comparable companies and is provided to help investors evaluate companies on a consistent basis, as well as to enhance understanding of our operating results. Adjusted EBITDA should not be construed as either an alternative to net income (loss) or as an indicator of our operating performance or an alternative to cash flows as a measure of liquidity.  The adjustments to calculate this non-GAAP financial measure and the basis for such adjustments are outlined below.  Please refer to the following table below that reconciles GAAP net income (loss) to Adjusted EBITDA.

The adjustments to calculate this non-GAAP financial measure, and the basis for such adjustments, are outlined below:

Interest income and interest expense, net. The Company receives interest income on investments and incurs interest expense on loans, capital leases and other financing arrangements, including the amortization of issue discounts and deferred financing costs. These amounts may vary from period to period due to changes in cash and debt balances.

Income taxes. The Company's tax expense can fluctuate materially from period to period due to tax adjustments that may not be directly related to underlying operating performance or to the current period of operations and may not necessarily reflect the impact of utilization of our NOLs.

Depreciation. The Company incurs depreciation expense (recorded in cost of revenues and in operating expenses) related to capital assets purchased, leased or constructed to support the ongoing operations of the business. The assets are recorded at cost or fair value and are depreciated over the estimated useful lives of individual assets.

Amortization of intangible assets. The Company incurs amortization of intangible expense related to acquisitions it has made. These intangible assets are valued at the time of acquisition and are amortized over the estimated useful lives.

Amortization of capitalized contract and development costs. The Company incurs amortization of previously capitalized software development and non-recurring engineering or design costs related to certain products or offerings in its Unmanned Systems, rocket support and services, and space and satellite businesses as related units are sold or over the estimated useful life, as applicable.

Stock-based compensation expense. The Company incurs expense related to stock-based compensation included in its GAAP presentation of selling, general and administrative expense. Although stock-based compensation is an expense of the Company and viewed as a form of compensation, these expenses vary in amount from period to period, and are affected by market forces that are difficult to predict and are not within the control of management, such as the market price and volatility of the Company's shares, risk-free interest rates and the expected term and forefeiture rates of the awards. Management believes that exclusion of these expenses allows comparison of operating results to those of other companies that disclose non-GAAP financial measures that exclude stock-based compensation.

Foreign transaction (gain) loss. The Company incurs transaction gains and losses which are not hedged related to transactions with foreign customers in currencies other than the U.S. dollar. In addition, certain intercompany transactions can give rise to realized and unrealized foreign currency gains and losses.

Acquisition and transaction related items. The Company incurs transaction related costs, such as legal and accounting fees and other expenses, related to acquisitions and divestiture activities. Management believes these items are outside the normal operations of the Company's business and are not indicative of ongoing operating results.

Restructuring costs. The Company incurs restructuring costs for cost reduction actions which include employee termination costs, facility shut-down related costs and lease commitment costs for unused, excess or exited facilities.  Management believes that these costs are not indicative of ongoing operating results as they are either non-recurring and/or not expected when full capacity and volumes are achieved.

Legal related items. The Company incurs costs related to pending legal settlements and other legal related matters. Management believes these items are outside the normal operations of the Company's business and are not indicative of ongoing operating results.

Adjusted EBITDA is a non-GAAP financial measure and should not be considered in isolation or as a substitute for financial information provided in accordance with GAAP. This non-GAAP financial measure may not be computed in the same manner as similarly titled measures used by other companies. The Company expects to continue to incur expenses similar to the Adjusted EBITDA financial adjustments described above, and investors should not infer from the Company's presentation of this non-GAAP financial measure that these costs are unusual, infrequent, or non-recurring. 

Reconciliation of Net Income to Adjusted EBITDA is as follows:

         Three Months Ended
 Six Months Ended
 June 28,  June 29,  June 28,  June 29,  2026  2025  2026  2025             Net income$                     4.4  $                     2.9  $                   16.3  $                     7.4 Interest (income) expense, net(10.2) 1.2  (14.7) 2.1 Provision for income taxes2.6  1.7  0.5  2.6 Depreciation (including cost of service revenues and product sales)12.0  9.0  23.0  17.3 Stock-based compensation16.3  8.6  31.3  17.3 Foreign transaction (gain) loss(0.2) 0.3  (0.3) 0.7 Amortization of intangible assets10.1  2.8  15.9  4.9 Amortization of capitalized contract and development costs2.4  0.9  4.2  1.8 Acquisition and restructuring related items and other0.8  -  2.7  - Reversal of contingent acquisition consideration-  -  (2.0) - Resolution of previously recorded contingent liability-  (1.1) -  (1.1)Litigation fees and legal related items-  2.0  -  2.0 Adjusted EBITDA$                   38.2  $                   28.3  $                   76.9  $                   55.0              Kratos Defense & Security Solutions, Inc.
Unaudited Segment Data
(in millions)     Three Months Ended
 Six Months Ended
 June 28,  June 29,  June 28,  June 29,  2026  2025  2026  2025 Revenues:           Unmanned Systems$79.1  $73.2  $161.7  $136.3 Kratos Government Solutions379.7  278.3  668.1  517.8 Total revenues$458.8  $351.5  $829.8  $654.1             Operating income           Unmanned Systems$1.2  $(0.2) $2.5  $(1.9)Kratos Government Solutions14.3  12.5  34.6  29.5 Unallocated corporate expense, net(17.1) (8.6) (34.0) (17.3)Total operating income (loss)$(1.6) $3.7  $3.1  $10.3             Note: Unallocated corporate expense, net includes costs for certain stock-based compensation programs (including stock-based compensation costs for the employee stock purchase plan and restricted stock units), the effects of items not considered part of management’s evaluation of segment operating performance, and acquisition and restructuring related items, corporate costs not allocated to the segments, legal related items, and other miscellaneous corporate activities.
  Reconciliation of Segment Operating Income (Loss) to Adjusted EBITDA is as follows:

 Three Months Ended
 Six Months Ended
 June 28,  June 29,  June 28,  June 29,  2026  2025  2026  2025 Unmanned Systems           Operating income (loss)$                     1.1  $                   (0.2) $                     2.5  $                   (1.9)Other income-  -  0.1  0.1 Depreciation2.9  2.7  5.7  5.0 Amortization of intangible assets1.0  1.0  1.9  2.0 Amortization of capitalized contract and development costs0.1  -  0.1  - Resolution of Previously Recorded Contingent Liability-  (0.3) -  (0.3)Litigation Fees and Legal Related Items-  0.5  -  0.5 Adjusted EBITDA$                     5.1  $                     3.7  $                   10.3  $                     5.4 % of revenue6.4% 5.1% 6.4% 4.0%            Kratos Government Solutions           Operating income$                   14.3  $                   12.5  $                   34.6  $                   29.5 Other income(1.7) 2.4  (1.4) 2.4 Depreciation9.1  6.3  17.3  12.3 Amortization of intangible assets9.1  1.8  14.0  2.9 Amortization of capitalized contract and development costs2.3  0.9  4.1  1.8 Reversal of contingent acquisition consideration-  -  (2.0) - Resolution of Previously Recorded Contingent Liability-  (0.8) -  (0.8)Litigation Fees and Legal Related Items-  1.5  -  1.5 Adjusted EBITDA$                   33.1  $                   24.6  $                   66.6  $                   49.6 % of revenue8.7% 8.8% 10.0% 9.6%            Total Adjusted EBITDA$                   38.2  $                   28.3  $                   76.9  $                   55.0 % of revenue8.3% 8.1% 9.3% 8.4%             Kratos Defense & Security Solutions, Inc.
Unaudited Condensed Consolidated Balance Sheets
(in millions)
           June 28,  December 28,
 2026  2025 Assets     Current assets:     Cash and cash equivalents$1,437.6  $560.6 Accounts receivable, net171.3  165.0 Unbilled receivables, net405.4  292.4 Inventoried costs, net235.9  188.2 Prepaid expenses24.1  12.9 Other current assets82.2  43.8 Total current assets2,356.5  1,262.9 Property, plant and equipment, net419.4  361.9 Operating lease right-of-use assets50.6  43.4 Goodwill871.2  595.7 Intangible assets, net220.8  53.9 Other assets159.4  144.4 Investment in joint venture11.9  5.0 Total assets$4,089.8  $2,467.2 Liabilities and Stockholders’ Equity     Current liabilities:     Accounts payable$104.8  $69.6 Accrued expenses95.9  60.5 Accrued compensation92.2  82.3 Billings in excess of costs and earnings on uncompleted contracts93.6  73.4 Current portion of operating lease liabilities13.8  12.8 Current portion of finance lease liabilities5.1  3.4 Other current liabilities19.9  9.0 Total current liabilities425.3  311.0 Operating lease liabilities, net of current portion39.9  33.8 Finance lease liabilities, net of current portion134.8  95.8 Other long-term liabilities63.0  30.3 Total liabilities663.0  470.9 Commitments and contingencies     Stockholders’ equity:     Common stock0.2  0.2 Additional paid-in capital4,051.6  2,635.9 Accumulated other comprehensive income (loss)0.6  2.1 Accumulated deficit(625.6) (641.9)Total equity3,426.8  1,996.3 Total liabilities and stockholders’ equity$4,089.8  $2,467.2        Kratos Defense & Security Solutions, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(in millions)
       Six Months Ended
 June 28,  June 29,  2026  2025 Operating activities:     Net income$16.3  $7.4 Adjustments to reconcile net income to net cash provided by (used in) operating activities:     Depreciation and amortization38.9  22.2 Amortization of lease right-of-use assets6.9  6.0 Deferred income taxes2.1  - Stock-based compensation31.3  17.3 Amortization of deferred financing costs0.2  0.3 Provision for doubtful accounts0.1  - Changes in assets and liabilities, net of acquisitions:     Accounts receivable16.7  (23.1)Unbilled receivables(104.3) (49.9)Inventoried costs(24.8) (7.3)Prepaid expenses and other assets(36.6) (27.3)Operating lease liabilities(7.5) (5.7)Accounts payable23.0  17.5 Accrued expenses20.6  9.1 Accrued compensation(3.2) - Billings in excess of costs and earnings on uncompleted contracts(10.7) (5.1)Income tax receivable and payable(3.9) (0.9)Other liabilities(3.5) (1.4)Net cash used in operating activities(38.4) (40.9)Investing activities:     Cash paid for acquisitions, net of cash acquired(346.8) - Proceeds from sale of assets13.5  - Investment in joint venture(6.9) - Capital expenditures(37.1) (43.1)Proceeds from state grant for capital construction2.0  - Net cash used in investing activities(375.3) (43.1)Financing activities:     Repayment under credit facility and term loan-  (5.0)Proceeds from the issuance of common stock, net of issuance costs1,348.4  555.9 Debt issuance costs(1.4) - Payment under finance leases(2.0) (0.9)Payments of employee taxes withheld from share-based awards(59.1) (18.3)Proceeds from shares issued under equity plans5.3  4.6 Net cash provided by financing activities1,291.2  536.3 Net cash flows877.5  452.3 Effect of exchange rate changes on cash and cash equivalents(0.5) 2.0 Net increase in cash and cash equivalents877.0  454.3 Cash and cash equivalents at beginning of period560.6  329.3 Cash and cash equivalents at end of period$1,437.6  $783.6        Kratos Defense & Security Solutions, Inc.
Unaudited Non-GAAP Measures
Computation of Adjusted Earnings Per Share
(in millions, except per share data)
       Adjusted income and adjusted income per diluted common share (Adjusted EPS) are non-GAAP measures for reporting financial performance and exclude the impact of certain items and, therefore, have not been calculated in accordance with GAAP. Management believes that exclusion of these items assists in providing a more complete understanding of the Company's underlying results and trends and allows for comparability with our peer company index and industry. The Company uses these measures along with the corresponding GAAP financial measures to manage the Company's business and to evaluate its performance compared to prior periods and the marketplace. The Company defines adjusted income before amortization of intangible assets and capitalized contract and development costs, depreciation, stock based compensation, foreign transaction gain/loss, and acquisition and restructuring related items and other. The estimated impact to income taxes excludes the impact to the expenses and release of valuation alloweffective tax rate, current tax provision and deferred tax provision, and excludes the impact of discrete items, including transaction related expenses and release of valuation allowance, or benefit related to the add-backs.*     
Adjusted EPS reflects adjusted income on a per share basis using weighted average diluted shares outstanding.

The following table reconciles the most directly comparable GAAP financial measures to the non-GAAP financial measures.

 Three Months Ended
 Six Months Ended
 June 28,  June 29,  June 28,  June 29,  2026  2025  2026  2025 Net income$4.4  $2.9  $16.3  $7.4 Less: GAAP provision for income taxes2.6  1.7  0.5  2.6 Income before taxes7.0  4.6  16.8  10.0 Add: Amortization of intangible assets10.1  2.8  15.9  4.9 Add: Amortization of capitalized contract and development costs2.4  0.9  4.2  1.8 Add: Depreciation12.0  9.0  23.0  17.3 Add: Stock-based compensation16.3  8.6  31.3  17.3 Add: Foreign transaction (gain) loss(0.2) 0.3  (0.3) 0.7 Add: Acquisition and restructuring related items and other0.8  -  2.7  - Less: Reversal of contingent acquisition consideration-     (2.0)   Non-GAAP Adjusted income from consolidated operations before income taxes48.4  26.2  91.6  52.0 Income taxes on Non-GAAP measure Adjusted income*9.0  9.1  17.5  16.0 Non-GAAP Adjusted net income$39.4  $17.1  $74.1  $36.0                         Diluted earnings per common share$0.02  $0.02  $0.09  $0.05 Less: GAAP provision for income taxes0.01  0.01  -  0.02 Add: Amortization of intangible assets0.06  0.02  0.09  0.03 Add: Amortization of capitalized contract and development costs0.01  0.01  0.02  0.01 Add: Depreciation0.07  0.06  0.13  0.11 Add: Stock-based compensation0.09  0.05  0.16  0.11 Add: Foreign transaction loss-  -  -  - Add: Acquisition and restructuring related items and other-  -  0.01  - Less: Reversal of contingent acquisition consideration      (0.01) - Income taxes on Non-GAAP measure Adjusted income*(0.05) (0.06) (0.09) (0.10)Adjusted income per diluted common share$0.21  $0.11  $0.40  $0.23             Weighted average diluted common shares outstanding190.1  157.4  184.8  156.9              *The impact to income taxes is calculated by recasting income before income taxes to include the add-backs involved in determining Adjusted Income before income taxes and recalculating the income tax provision, including current and deferred income taxes, using the Adjusted Income before income taxes.The recalculation also adjusts for any discrete tax expense, including transaction related expenses and the release of valuation allowance, or benefit related to the add-backs. 

Investors have faded drone stocks in 2026. But many companies in this sector continue to deliver strong results. So why the disconnect with stock prices? In a word, valuation. The drone industry has a long runway for growth, and stock prices have gotten well ahead of that story.

Each of the stocks presented here shares a common theme. Each has climbed in the last five years. However, they are all down sharply from all-time highs made in early 2026. That doesn’t mean investors have lost faith in these companies. It just means that investors have taken profits on stocks that have a bright future but an overvalued present.

Get AeroVironment alerts:

The Pentagon Has Plans to Dramatically Increase Spending on Drone TechnologyOne of the drone industry’s largest customers is the U.S. military. Unmanned, autonomous vehicles will play a key role in the future of warfare. That commitment is outlined in the Pentagon's $1.5 trillion budget request in April 2026.

That request earmarks $53.6 billion for autonomous drone platforms and contested logistics. Another $21 billion is reserved for munitions, counter-drone technologies, and advanced systems like the Collaborative Combat Aircraft and MQ-25. That means approximately $75 billion out of $1.5 trillion is dedicated to this sector. This would represent the largest investment in drone warfare and counter-drone technology in U.S. history.

To put that number in perspective, the three stocks in this article delivered a combined trailing 12-month (TTM) revenue of around $3.4 billion. It’s true that these aren’t the only names in this space, but it does show investors the size of the opportunity.

AeroVironment: A Pure-Play Bet With Room to RecoverAeroVironment NASDAQ: AVAV is probably one of the best pure-play names in the drone sector. AVAV is up more than 50% in the last five years, but it’s down 40% in the last 12 months.

AeroVironment Today

$159.18 +9.81 (+6.57%)

As of 08/3/2026 04:00 PM Eastern

52-Week Range$135.20▼

$417.86Price Target$266.68

The concern isn’t about revenue growth. It's more about how much the company will have to invest to fulfill that growth. Adjusted earnings per share (EPS) growth year-over-year (YOY) in the company’s fiscal year 2027 (FY2027) is projected in a range between $3.02 and $3.34. At the high end of that range, it would be roughly flat YOY.

In addition to a falling stock price, analysts’ price targets have also declined since the company’s fourth-quarter earnings report for FY2026.

However, this seems to be the case of investors setting a lower ceiling, and the consensus price target of $266.68 still leaves an impressive 71% upside.

Kratos: A Direct Line Into the Pentagon's Drone BuildoutLike AeroVironment, Kratos Defense & Security Solutions NASDAQ: KTOS has seen its price targets lowered by analysts since the company’s Q1 2026 earnings report. However, also like AVAV, analysts are still forecasting significant upside. In this case, analysts give KTOS a consensus price target of $101.29, which is over 100% higher than the stock’s price as of this writing.

Kratos Defense & Security Solutions Today

KTOS

Kratos Defense & Security Solutions

$49.21 +2.61 (+5.60%)

As of 08/3/2026 04:00 PM Eastern

52-Week Range$43.09▼

$134.00P/E Ratio289.47

Price Target$101.29

Kratos delivered Q1 2026 revenue of $371 million, up 22.6% year-over-year, alongside a record $2 billion backlog and an opportunity pipeline exceeding $14 billion. Much of that momentum ties directly to the Pentagon's spending priorities outlined above.

Kratos is viewed as a key beneficiary of the Pentagon's $1.1 billion Drone Dominance Program, thanks to its AI-enabled XQ-58A Valkyrie drone and existing defense backlog. The company also successfully completed flight testing of its Firejet target drone, powered by a domestically produced J85 engine, reinforcing its vertically integrated drone-and-propulsion strategy while easing supply-chain risk.

Kratos reports Q2 2026 earnings on Aug. 4, with analysts expecting EPS of 13 cents (up 18.18% YOY) and revenue of $411.7 million (up 17.1% YOY). The company has beaten earnings estimates in each of the last four quarters. Investors should note KTOS trades at a steep premium, so execution on this backlog matters more than headline growth alone.

Red Cat: Small-Cap Exposure to Outsized Revenue GrowthRed Cat Holdings NASDAQ: RCAT is the small-cap name among these three stocks with a market cap of around $990 million as of this writing. It’s also the only name on this list that’s not delivering positive EPS.

Red Cat Today

$8.26 +0.73 (+9.69%)

As of 08/3/2026 04:00 PM Eastern

52-Week Range$5.77▼

$18.78Price Target$21.40

But that’s where the asymmetric opportunity may lie. 

The U.S.-based provider of advanced all-domain drone and robotic solutions for defense and national security is starting to take off.

In Q1 2026, Red Cat delivered YOY revenue growth of 849% with a gross margin that grew 199% from the prior quarter. That means that the company should have sufficient revenue to prevent the shareholder dilution that has weighed on earnings.

That could shift the risk-reward of RCAT into investors’ favor. Analysts have a consensus price target on RCAT of $21.40, which would be a gain of over 160% from is price as of this writing.

Should You Invest $1,000 in AeroVironment Right Now?Before you consider AeroVironment, you'll want to hear this.

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Deciding between a fast-growing semiconductor player and a steady defense innovator involves balancing massive growth potential against national security demand. Astera Labs (ALAB +20.00%) and Kratos Defense & Security Solutions (KTOS +5.22%) offer two distinct paths.

Astera Labs focuses on connectivity solutions that power artificial intelligence infrastructure, sitting at the heart of the data center boom. Kratos develops unmanned systems and hypersonic technologies for global security needs. While both companies operate in high-tech fields, their financial profiles and market dependencies create very different investment cases for your consideration.

The case for Astera LabsAstera Labs designs hardware and software used to connect high-performance components within AI-focused data centers. This business model places it among the high-growth tech stocks that support massive cloud infrastructure. The company relies heavily on a small group of large customers, with one buyer representing over 70% of revenue in 2025, which adds concentration risk.

In FY 2025, revenue reached $852.5 million, representing a massive 115.1% increase over the previous year. The company reported net income of $219.1 million for the period, which is a significant improvement over the prior year loss. This resulted in a net margin of 25.7%, which is the percentage of revenue remaining after all operating and non-operating expenses are paid.

As of its December 2025 balance sheet, the debt-to-equity ratio is 0.0x, meaning the company carries no debt relative to its equity. The current ratio, which measures the ability to pay short-term debts with current assets, sits at 10.2x. Free cash flow reached $281.8 million in FY 2025, though stock-based compensation represented roughly 50.1% of operating cash flow, which inflates reported cash generation.

Kratos Defense & Security Solutions develops technology for national security, including unmanned systems and hypersonic flight. Its business is heavily dependent on the U.S. Government, which accounted for approximately 68% of 2025 revenue. Growth is supported by substantial new awards, including $400 million in defense funding and a $156 million Project Solar Shield contract.

In FY 2025, revenue reached $1.3 billion, representing an 18.5% increase over the previous year. The company reported net income of $22.0 million for the period. This resulted in a net margin of 1.6%, which measures the portion of each dollar of revenue that translates into profit.

As of its December 2025 balance sheet, the debt-to-equity ratio is 0.1x, which means the company has very low borrowing compared to its shareholder equity. The current ratio, which shows the ability to cover short-term liabilities with current assets, is approximately 4.1x. Free cash flow was negative $137.4 million in FY 2025, representing the cash remaining after paying for operations and capital equipment.

Risk profile comparisonAstera Labs faces significant revenue concentration, as three customers account for 86% of its sales. It must also compete with large semiconductor firms like Broadcom, Marvell, and Credo while navigating supply chain risks related to its reliance on Taiwan Semiconductor Manufacturing Company. Finally, U.S. export controls on AI chips to China could limit its future market expansion.

Kratos is heavily dependent on the U.S. government, with 68% of its revenue tied to defense spending and political budget decisions. The company also faces execution risks on complex, fixed-price contracts where cost overruns cannot be passed to the customer. Furthermore, a shortage of skilled engineers with security clearances could create bottlenecks in fulfilling its growing backlog.

Valuation comparisonKratos appears significantly cheaper on a P/S ratio basis, while Astera Labs carries a higher Forward P/E due to its rapid growth.

MetricAstera LabsKratos Defense & Security SolutionsForward P/E93.5x63.7xP/S ratio56.8x6.8xValuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.

Which stock would I buy in 2026?I'd go with Kratos. Astera Labs is one of the more exciting semiconductor stories in the market right now. Revenue has surged and its connectivity chips are embedded in the AI data centers that power some of the world's largest technology companies. The growth trajectory here is steep. But that customer concentration risk looms large, and a handful of hyperscalers account for the vast majority of revenue. It introduces a fragility that's easy to overlook when business is booming.

Kratos earns its growth the old-fashioned way, with government contracts, record backlogs, and programs that take years to replace. The opportunity pipeline stretching well beyond that backlog suggests the demand environment is strong for years to come. Defense spending tailwinds are durable, and I like that Kratos sits at the center of some of the Pentagon's highest priorities right now.

You can think of it this way: Astera wins if the AI build-out stays on its current trajectory, but Kratos wins in almost any environment. That’s why it’s my pick.

Wall Street expects a year-over-year increase in earnings on higher revenues when Kratos (KTOS - Free Report) reports results for the quarter ended June 2026. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates.

The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on August 4. On the other hand, if they miss, the stock may move lower.

While the sustainability of the immediate price change and future earnings expectations will mostly depend on management's discussion of business conditions on the earnings call, it's worth handicapping the probability of a positive EPS surprise.

Zacks Consensus EstimateThis military contractor is expected to post quarterly earnings of $0.13 per share in its upcoming report, which represents a year-over-year change of +18.2%.

Revenues are expected to be $411.69 million, up 17.1% from the year-ago quarter.

Estimate Revisions TrendThe consensus EPS estimate for the quarter has been revised 5.88% higher over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period.

Investors should keep in mind that the direction of estimate revisions by each of the covering analysts may not always get reflected in the aggregate change.

Price, Consensus and EPS Surprise

Earnings WhisperEstimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. Our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction) -- has this insight at its core.

The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier.

Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only.

A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP.

Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell).

How Have the Numbers Shaped Up for Kratos?For Kratos, the Most Accurate Estimate is higher than the Zacks Consensus Estimate, suggesting that analysts have recently become bullish on the company's earnings prospects. This has resulted in an Earnings ESP of +11.70%.

On the other hand, the stock currently carries a Zacks Rank of #4.

So, this combination makes it difficult to conclusively predict that Kratos will beat the consensus EPS estimate.

Does Earnings Surprise History Hold Any Clue?While calculating estimates for a company's future earnings, analysts often consider to what extent it has been able to match past consensus estimates. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number.

For the last reported quarter, it was expected that Kratos would post earnings of $0.13 per share when it actually produced earnings of $0.16, delivering a surprise of +23.08%.

Over the last four quarters, the company has beaten consensus EPS estimates four times.

Bottom LineAn earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss.

That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.

Kratos doesn't appear a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release.

An Industry Player's Expected ResultsAnother stock from the Zacks Aerospace - Defense Equipment industry, Voyager Technologies, Inc. (VOYG - Free Report) , is soon expected to post loss of $0.95 per share for the quarter ended June 2026. This estimate indicates a year-over-year change of -58.3%. Revenues for the quarter are expected to be $48.43 million, up 6% from the year-ago quarter.

Over the last 30 days, the consensus EPS estimate for Voyager Technologies, Inc. has remained unchanged. Nevertheless, the company now has an Earnings ESP of +6.32%, reflecting a higher Most Accurate Estimate.

When combined with a Zacks Rank of #3 (Hold), this Earnings ESP indicates that Voyager Technologies, Inc. will most likely beat the consensus EPS estimate. Over the last four quarters, the company surpassed consensus EPS estimates two times.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

Posted by Defense World Staff on Jul 28th, 2026

American Capital Management Inc. trimmed its stake in Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS – Free Report) by 34.4% in the 1st quarter, according to the company in its most recent 13F filing with the Securities and Exchange Commission. The firm owned 1,071,908 shares of the aerospace company’s stock after selling 562,585 shares during the period. Kratos Defense & Security Solutions accounts for about 4.1% of American Capital Management Inc.’s investment portfolio, making the stock its 6th biggest holding. American Capital Management Inc. owned about 0.57% of Kratos Defense & Security Solutions worth $75,580,000 as of its most recent filing with the Securities and Exchange Commission.

A number of other large investors have also recently modified their holdings of the stock. IMG Wealth Management Inc. lifted its holdings in Kratos Defense & Security Solutions by 427.0% in the first quarter. IMG Wealth Management Inc. now owns 527 shares of the aerospace company’s stock worth $37,000 after buying an additional 427 shares during the period. Quantinno Capital Management LP grew its holdings in shares of Kratos Defense & Security Solutions by 154.2% during the 1st quarter. Quantinno Capital Management LP now owns 63,373 shares of the aerospace company’s stock worth $4,468,000 after acquiring an additional 38,440 shares during the period. Themes Management Co LLC grew its holdings in shares of Kratos Defense & Security Solutions by 68.2% during the 1st quarter. Themes Management Co LLC now owns 8,184 shares of the aerospace company’s stock worth $577,000 after acquiring an additional 3,317 shares during the period. Gabelli Funds LLC raised its position in shares of Kratos Defense & Security Solutions by 6.0% in the 1st quarter. Gabelli Funds LLC now owns 21,371 shares of the aerospace company’s stock worth $1,507,000 after acquiring an additional 1,215 shares in the last quarter. Finally, Compound Planning Inc. bought a new position in shares of Kratos Defense & Security Solutions in the 1st quarter worth approximately $221,000. Institutional investors own 75.92% of the company’s stock.

Kratos Defense & Security Solutions Trading Up 4.4% NASDAQ KTOS opened at $49.45 on Tuesday. Kratos Defense & Security Solutions, Inc. has a 12 month low of $45.58 and a 12 month high of $134.00. The company has a current ratio of 5.63, a quick ratio of 5.08 and a debt-to-equity ratio of 0.04. The stock’s fifty day moving average price is $53.47 and its 200-day moving average price is $74.33. The stock has a market cap of $9.27 billion, a P/E ratio of 290.88 and a beta of 1.07.

Kratos Defense & Security Solutions (NASDAQ:KTOS – Get Free Report) last posted its quarterly earnings results on Wednesday, May 6th. The aerospace company reported $0.16 EPS for the quarter, beating analysts’ consensus estimates of $0.13 by $0.03. Kratos Defense & Security Solutions had a net margin of 2.08% and a return on equity of 2.82%. The firm had revenue of $371.00 million for the quarter, compared to analysts’ expectations of $345.00 million. During the same quarter in the prior year, the company posted $0.12 earnings per share. The business’s revenue for the quarter was up 22.6% on a year-over-year basis. As a group, equities analysts forecast that Kratos Defense & Security Solutions, Inc. will post 0.48 EPS for the current fiscal year.

Wall Street Analyst Weigh In A number of analysts have recently commented on the stock. Clear Str upgraded shares of Kratos Defense & Security Solutions to a “strong-buy” rating in a report on Wednesday, April 29th. BNP Paribas Exane lifted their price target on shares of Kratos Defense & Security Solutions from $80.00 to $85.00 and gave the company a “neutral” rating in a research report on Thursday, May 7th. UBS Group reissued a “neutral” rating and set a $82.00 price target on shares of Kratos Defense & Security Solutions in a research report on Thursday, May 7th. Weiss Ratings reissued a “hold (c)” rating on shares of Kratos Defense & Security Solutions in a research note on Friday, July 17th. Finally, Piper Sandler cut their price objective on shares of Kratos Defense & Security Solutions from $99.00 to $75.00 and set a “neutral” rating on the stock in a report on Thursday, May 7th. Three equities research analysts have rated the stock with a Strong Buy rating, sixteen have assigned a Buy rating and four have issued a Hold rating to the company’s stock. According to MarketBeat, Kratos Defense & Security Solutions presently has an average rating of “Moderate Buy” and an average target price of $101.29.

View Our Latest Stock Report on KTOS

Insider Activity at Kratos Defense & Security Solutions In related news, insider Steven S. Fendley sold 7,000 shares of Kratos Defense & Security Solutions stock in a transaction on Monday, June 29th. The stock was sold at an average price of $48.37, for a total transaction of $338,590.00. Following the transaction, the insider directly owned 302,126 shares in the company, valued at approximately $14,613,834.62. The trade was a 2.26% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is accessible through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, SVP Marie Mendoza sold 1,500 shares of Kratos Defense & Security Solutions stock in a transaction dated Monday, June 15th. The shares were sold at an average price of $57.93, for a total value of $86,895.00. Following the transaction, the senior vice president directly owned 64,447 shares in the company, valued at approximately $3,733,414.71. The trade was a 2.27% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders have sold 137,036 shares of company stock valued at $7,780,257 in the last 90 days. 1.50% of the stock is owned by company insiders.

Kratos Defense & Security Solutions Profile (Free Report)

Kratos Defense & Security Solutions, Inc (NASDAQ: KTOS) is a technology-driven company that specializes in national security and defense solutions for government and military customers. The firm’s core capabilities span unmanned systems, satellite communications, missile defense, cyber security, and directed-energy weapons. Through its integrated approach, Kratos delivers mission-critical products and services designed to enhance operational readiness and support force modernization initiatives.

In the unmanned systems arena, Kratos develops high-performance aerial platforms used as target drones, low-cost attritable aircraft and experimental stealth demonstrators.

Further Reading Five stocks we like better than Kratos Defense & Security Solutions AirJoule’s Kubota Deal Is a Major Validation—But the Hard Part Comes Next Dividend Stocks May Be the Quiet Rotation Trade Investors Are Missing Now Refiner Stocks Are Near Record Highs—Can Iran-Driven Margins Keep Them There? Verizon May Be an AI Infrastructure Stock Hiding in Plain Sight

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