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On July 23, 2026, Kratos Defense and Security Solutions Inc (KTOS) shares rose 3.2% to a current price of $49.44. The stock has seen significant volatility over t

SAN DIEGO, July 23, 2026 (GLOBE NEWSWIRE) -- Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS), a Technology Company in the Defense, National Security and Global Markets, announced today that it will publish financial results for the second quarter 2026 after the close of market on Tuesday, August 4th. Management will discuss the Company's operations and financial results in a conference call beginning at 2:00 p.m.

Key Takeaways Ondas is scaling through acquisitions, but the pace raises questions about integration and execution.Kratos is diversifying into hypersonics, space, missile systems, radar and microwave electronics.Valuation, estimate trends and steep share declines add more complexity to the choice between them. The global drone industry is rapidly evolving into one of the most strategically important sectors in defense, surveillance, logistics and autonomous warfare.

According to a report from Mordor Intelligence, the global drone tech market is expected to witness a CAGR of 9.3% from 2026 to 2031. The convergence of drones with artificial intelligence (“AI”), cloud computing and edge processing is further driving adoption across verticals.

Ondas Inc. (ONDS - Free Report) and Kratos Defense & Security Solutions (KTOS - Free Report) both operate in the defense and unmanned systems domain, but from very different positions in terms of scale and maturity.

For investors seeking exposure to this theme, the key question remains: which stock offers the better opportunity right now?

Let us do a deep dive into the companies’ competitive dynamics to understand which is better positioned in the industry.

ONDS: Robust M&A ActivityOndas, through rapid M&A, has built a multi-domain autonomy platform spanning Intelligence, Surveillance, Reconnaissance or ISR, c-UAS, loitering munitions/strike systems, unmanned ground vehicles and stratospheric sensing via World View acquisition.

DZYNE Technologies is the latest name in Ondas’ long list of acquisitions. The deal is valued at $875.8 million, comprising $200 million in cash and roughly $675 million in stock. DZYNE further expands Ondas’ reach across c-UAS, multi-domain ISR, precision strike and mission intelligence and autonomous systems. Both World View and DZYNE will operate within the company’s newly launched business division, Ondas Sentinel.

Following this development, Ondas now expects 2026 revenues to be at least $525 million from the previous forecast of $390 million. DZYNE is expected to contribute approximately $191 million in revenues in 2026 and $300 million in 2027.

This increase also reflects contributions from the Omnisys (adds AI-powered battlefield orchestration software to its autonomous defense systems portfolio) acquisition announced in May 2026. ONDS also announced the $125 million acquisition of Cyberhawk, a provider of drone-based infrastructure inspection and AI-powered asset intelligence in June 2026. In the first quarter, the company completed five acquisitions (World View, INDO Earth, Rotron Aerospace, Bird Aero and Mistral Inc).

This expanding reach is complemented by a rapidly growing opportunity set, including a $4.3 billion active pipeline and more than $1.6 billion in strategic program potential, as highlighted by management on the first quarter earnings call. Back then, management had noted that the current pipeline represents more than $500 million in potential annualized revenue opportunity. 

The pipeline spans multiple operational domains, including aerial security, ISR and unmanned ground vehicles. The company is also targeting large-scale defense initiatives such as the LASSO program, which alone represents a potential opportunity nearing $1 billion. As of June 22, 2026, Ondas noted that second-quarter-to-date order activity stood at more than $150 million.

However, Ondas’ story is not without challenges. Extensive M&A amplifies risks, as so many acquisitions in such a short period can create integration overload and execution risks, as achieving targets depends on timely integration and conversion of backlog into revenues.

Ondas faces rising operating costs as it invests in personnel and infrastructure capabilities to capture additional market opportunities. Amid rising costs, management expects adjusted EBITDA losses to stay elevated in the second quarter of 2026, likely marking the peak loss period. Beyond that, ONDS expects improvement throughout the year, driven by higher revenues, gross profit and operational scale. Notably, management pulled forward the OAS EBITDA profitability target to the first quarter of 2027 — roughly six months ahead of the earlier target.

KTOS: Established Player in the Drone SpaceThe broader demand backdrop strongly supports sustained growth in Kratos’ drone business. Unlike ONDS, Kratos’ unmanned systems business involves scaled defense programs and vertical integration. At the heart of this business lies the XQ-58A Valkyrie combat collaborative aircraft (“CCA”), which has secured a key role in the U.S. defense ecosystem.

The company generated roughly $20 million in first-quarter 2026 revenues, predominantly from the Valkyrie tactical drone. Quarterly Unmanned Systems revenues came in at $82.6 million from $63.1 million a year earlier.  KTOS is scaling its Valkyrie production capacity, aiming to produce 40 units per year by early 2028.

Additionally, the company is actively participating in multiple next-gen drone and CCA programs, with strong positioning in future procurement phases. Earlier in the year, Northrop Grumman, a KTOS partner, received the $230 million MUX TACAIR CCA program award, which will be split equally with Kratos. For this program, Northrop will equip its mission systems with Kratos Valkyrie CCA, validating Valkyrie’s operational relevance. KTOS is also working with Airbus to deliver a UCCA offering (Valkyrie + Airbus’ MARS mission system) for the German Air Force.

The company is also expanding its presence in C-UAS, a category expected to ramp significantly over the next few years. It recently secured a $156 million “sole-source, single-award Indefinite Delivery/Indefinite Quantity (IDIQ) contract” from the U.S. Department of Energy's National Nuclear Security Administration, Office of Secure Transportation (“OST”). Under the contract terms, KTOS will be delivering C-UAS platforms designed to safeguard OST's critical National Security mission.

Beyond drones, it is also expanding into other high-growth areas, diversifying the revenue stream. Management noted that its core businesses — hypersonics, unmanned systems, drones, propulsion systems, space and satellite systems, air defense, missile systems, radar, C-UAS and microwave electronics — align directly with U.S. defense priorities and are supported under the planned $1.5 trillion 2027 national security budget. The vast scope of its business ensures benefits from multiple high-growth vectors rather than reliance on drones.

That said, near-term execution remains uneven. The unmanned segment is inherently lumpy, with management guiding to a sequential step-down in unmanned systems’ revenues in the second quarter of 2026 due to shipment timing and production mix. Aggressive expansion across multiple domains brings along operational and execution risks. Heavy dependence on government contracts and volatile macroeconomic conditions, including supply-chain disruptions, remains concerning.

Price Performance & Valuation for ONDS & KTOSYear to date, both ONDS and KTOS are down 21.5% and 36.2%, respectively.

Image Source: Zacks Investment Research

In terms of the forward 12-month price-to-sales ratio, ONDS trades at 5.05X, higher than KTOS’ 4.6X.

Image Source: Zacks Investment Research

How Do Estimates Compare for ONDS & KTOS?For ONDS, earnings estimates for the current year have decreased 28.6% over the past 60 days.

Image Source: Zacks Investment Research

For KTOS, earnings estimates for the current year have been marginally revised up over the same time frame.

Image Source: Zacks Investment Research

ONDS or KTOS: Which Is a Better Pick?

Kratos to provide Mobile Counter-Unmanned Aircraft System (C-UAS) Platforms Designed to Support Critical National Security Mission July 21, 2026 08:00 ET  | Source: Kratos Defense & Security Solutions, Inc.

SAN DIEGO, July 21, 2026 (GLOBE NEWSWIRE) -- Kratos Defense & Security Solutions, Inc. (Nasdaq: KTOS), a technology company in the defense, national security and global markets, today announced it has been awarded a sole-source, single award Indefinite Delivery/Indefinite Quantity (IDIQ) contract for approximately $156 million, by the U.S. Department of Energy's National Nuclear Security Administration (NNSA) Office of Secure Transportation (OST), in support of Project Solar Shield.

Under this new contract award, Kratos will provide mobile Counter-Unmanned Aircraft System (C-UAS) platforms designed to support OST's critical National Security mission. The Office of Secure Transportation is responsible for the safe and secure ground and air transportation of nuclear weapons, weapon components, and special nuclear materials, as well as other missions supporting U.S. national security.

To address emerging threats to these operations, OST requires a mission-ready mobile platform capable of detecting, tracking, identifying, and responding to potentially hostile unmanned aircraft systems in real time. Unlike traditional fixed-site defense infrastructure, Project Solar Shield is designed to provide a dynamic mobile C-UAS capability that can support mission requirements wherever OST operations occur. The program will leverage commercial and government best-in-class C-UAS technologies, to provide a layered defense posture supporting OST personnel and mission requirements.

Kratos was selected following a rigorous technical evaluation and was identified as the provider capable of meeting OST's technical, cost, schedule, operational, safety, redundancy, integration, and long-term sustainment requirements. Kratos’ engineer-to-order approach combines C-UAS system, mobile platform design, command-and-control, and advanced power management technologies into a fully integrated solution, built for demanding threat and mission environments.

“Project Solar Shield represents a significant milestone for Kratos and the broader government C-UAS market,” said Dave Carter, President of Kratos’ Defense & Rocket Support Services Division. “As the first large scale government production contract of its kind built around this integrated approach, the program demonstrates the value of combining C-UAS, mobile platform design, command-and-control capabilities, and resilient power management into a single mission-ready solution. The resulting platform provides OST with a highly modular and scalable mobile C-UAS capability, designed to support evolving mission requirements across the continental United States.”

Eric DeMarco, President and CEO of Kratos, said, “We believe that Kratos’ technology, system and integration capabilities in the C-UAS mission area are industry leading, and also our ability to mass produce large quantities of relevant systems at an affordable cost. Our entire organization is proud to have received this program award to protect and secure critical United States assets and infrastructure.”

Work under this new program award will be performed at secure Kratos facilities. Due to security-related and other considerations, no additional information will be provided related to this contract award. Work under the contract is expected to begin immediately.

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 28, 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]

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

Elroy Air Recently Announced a Demand Pipeline Exceeding 1,400 Aircraft

Kratos to Increase Current Sacramento Workforce of 450+ High-Tech Employees as Production of Elroy Air's Autonomous Cargo Aircraft Accelerates

SAN DIEGO, July 20, 2026 (GLOBE NEWSWIRE) -- Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS), a Technology Company in the Defense, National Security and Global Markets, today announced that it will manufacture Elroy Air's Chaparral autonomous cargo aircraft in its expanding Sacramento, California production facility, supporting increasing demand across commercial logistics and defense markets while expecting to further grow its regional workforce of 450 high-tech employees by more than 50 as Chaparral production ramps.

The Chaparral is a hybrid-electric, vertical takeoff and landing (VTOL) autonomous cargo aircraft designed to transport more than 500 pounds of payload with a maximum range of up to 450 miles without requiring traditional airport infrastructure. The system is designed to support commercial middle-mile logistics while also providing a flexible, autonomous resupply capability for military operations.

The announcement marks the transition from strategic manufacturing partner to production execution following Elroy Air's recent announcement of its planned public listing and continued commercial momentum. Kratos is the exclusive U.S. manufacturer of the Chaparral aircraft and will fulfill all U.S. customer orders, with the first production aircraft planned for late 2026. Recent expansion of Kratos' Sacramento manufacturing operations provides the production capacity necessary to support anticipated increases in aircraft deliveries.

Located within driving distance of Elroy Air's headquarters, the expanded Sacramento facility strengthens collaboration between the two companies while increasing manufacturing capacity for one of the industry's most advanced autonomous cargo aircraft. The expansion will drive additional hiring across aircraft technicians, composite manufacturing specialists, assemblers, engineers, production operations, quality assurance, and program management positions, bringing Kratos' Sacramento-area workforce to more than 500 employees.

Steve Fendley, President of Kratos’ Unmanned Systems Division, said, “At Kratos, we have built our business around rapidly transitioning advanced unmanned aircraft from development into affordable, scalable production. Chaparral represents another example of Kratos leveraging its proven manufacturing capability, established supply chain, and experienced workforce to help bring an innovative aircraft into production at scale. As demand continues to build, our expanding Sacramento facility is well positioned to support both commercial and defense customers while creating additional high-value aerospace jobs in California.”

Dr. Andrew Clare, CEO of Elroy Air, said, “Demand for Chaparral is accelerating across defense, rapid response and commercial logistics and meeting it requires manufacturing at scale. Partnering with Kratos lets us build American-made autonomous cargo drones right here in California, at the pace our customers need.”

Elroy Air recently announced a demand pipeline exceeding 1,400 aircraft representing more than $5 billion in potential revenue opportunities from leading logistics and aviation companies, including Bristow Group, Barq Group, SLI, and FedEx. The company has also supported defense programs with the U.S. Army, U.S. Marine Corps, and U.S. Air Force for more than six years, demonstrating the growing dual-use market opportunity for the Chaparral platform. The company also recently announced plans to become a publicly traded company, positioning it to accelerate commercial-scale production.

Kratos continues to expand its national manufacturing footprint to meet increasing demand for affordable, mission-ready unmanned systems supporting U.S. and allied defense priorities, while enabling the production of innovative dual-use technologies serving both commercial and government customers.

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 28, 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]

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

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SummaryKratos Defense & Security Solutions earns a cautious Buy on strong backlog, book-to-bill, and funded multi-year growth visibility.KTOS’s premium valuation is justified by standout organic growth, margin-accretive mix evolution, and a robust pipeline, despite lumpy revenue timing.Dilution from equity raises is a real drag, but EV and EBITDA growth, not per-share metrics, should be the investor’s focus.Sustained book-to-bill ratio declines or cash conversion issues are key downside triggers; growth remains the critical pillar supporting KTOS’s multiple. Getty Images

The most challenging aspect of underwriting a long position in Kratos Defense & Security Solutions (KTOS) is underwriting the valuations, even after a correction that has pulled them back significantly from 2025 highs. My cautious

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Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within 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.

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Key Takeaways Kratos Defense is expanding manufacturing to support higher defense production volumes and future programs.KTOS is investing across missile, radar, electronic warfare, C5ISR and hypersonic production capabilities.KTOS trades below the industry's forward P/S average despite expanded domestic manufacturing investments. Kratos Defense & Security Solutions, Inc. (KTOS - Free Report) is investing in manufacturing infrastructure to support higher production volumes rather than relying solely on the development of advanced technologies. Management believes that expanding production capacity today is critical to meeting the growing demand anticipated from future U.S. and allied defense programs.

To support this strategy, Kratos Defense continues to invest across multiple business segments, including Defense Rocket Systems, Turbine Technologies, Microwave Electronics, C5ISR and Hypersonic Systems. The company is expanding manufacturing facilities, increasing engineering resources, and enhancing production capabilities to support programs involving missile propulsion, affordable cruise missiles, radar systems, electronic warfare, and next-generation defense technologies. These investments are intended to improve production readiness while enabling the company to compete for larger, long-duration contracts.

Another important pillar of KTOS' strategy is strengthening the domestic defense supply chain. As governments seek to reduce reliance on foreign suppliers for critical defense technologies, Kratos Defense's vertically integrated manufacturing model and U.S.-based operations provide greater control over production, quality and delivery schedules. This positions the company to support the Pentagon's broader objective of creating a more resilient and responsive industrial base capable of sustaining long-term military readiness.

As global defense spending continues to rise and the U.S. prioritizes rebuilding its industrial capacity, companies with scalable domestic manufacturing capabilities are likely to become increasingly important partners for the Department of Defense. By expanding production capacity and strengthening its supply chain, KTOS appears well positioned to benefit from one of the most significant defense modernization cycles in decades.

Defense Companies Benefiting From Similar TrendsSeveral other defense companies are also investing in expanding domestic manufacturing and production capacity, including:

RTX Corporation (RTX - Free Report) is increasing production of missile systems, air defense technologies, and advanced sensors to meet growing global demand.

Northrop Grumman (NOC - Free Report) continues to invest in facilities that support missile defense, strategic deterrence, space systems, and advanced propulsion technologies, helping strengthen the U.S. defense industrial base.

KTOS Stock’s Earnings EstimatesThe Zacks Consensus Estimate for 2026 earnings per share indicates an increase of 30.91% year over year.

Image Source: Zacks Investment Research

KTOS Stock Trades at a DiscountIn terms of valuation, KTOS’ forward 12-month price-to-sales (P/S) is 4.5X, a discount to the industry’s average of 8.67X.

Image Source: Zacks Investment Research

KTOS Stock’s Price PerformanceIn the past six months, KTOS’ shares have lost 62.3% compared with the industry’s 7.8% decline.

Image Source: Zacks Investment Research

KTOS’ Zacks Rank

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Jerry McGinn, who runs the Center for the Industrial Base at CSIS, went on CNBC with a number that will define the defense trade for the rest of the year. Roughly $50 billion in deal announcements have come out of the NATO summit in recent days, as allies convert last year’s pledge to reach 5% of GDP defense spending by 2030 into actual purchase orders. Canada, Germany, and Norway are lining up behind U.S. primes. McGinn’s message to investors was blunt about what to trust and what to discount.

The $50 Billion in Fresh Deals The headline transaction is NATO buying the Triton unmanned surveillance aircraft from Northrop Grumman, alongside deals featuring European firms like Saab on ISR systems (Saab trades in Stockholm, not on a U.S. exchange, so American investors get the theme through the primes). Northrop Grumman (NYSE:NOC | NOC Price Prediction) already booked $400 million in Triton awards in Q1 and is expanding B-21 production capacity with the Air Force. Its backlog stands at $95.6 billion, and management reaffirmed FY26 sales of $43.5 to $44.0 billion.

The stock is down 7.5% year to date, which tells you the market has not fully priced the NATO order book. Analyst consensus target is $689.33, against a current price near $541, with shares trading at a forward P/E of 19x.

The Commitment-to-Contract Gap Investors Have to Watch McGinn’s investor test is the whole ballgame. “What investors need to be looking at is how does this translate into actual real business contracts?” He flagged three hurdles. U.S. congressional approval comes first, then European parliamentary approval, then actual contracting. Pledges are cheap. Contracts show up in backlog.

Lockheed Martin (NYSE:LMT) is the clearest example of pledge-to-paper conversion. In its Q1 filing, CEO Jim Taiclet said the company signed framework agreements for advanced Patriot Missile, THAAD, and PrSM that will support raising production rates to 3 to 4 times current levels. That is a multi-year purchase commitment. Lockheed’s backlog closed 2025 at a record $194 billion. General Dynamics (NYSE:GD) shows the same conversion, with a consolidated Q1 book-to-bill of 2-to-1 and total estimated contract value climbing to $188.4 billion from $178.9 billion. GD shares are up 9.75% YTD and 23% over the past year, so much of the good news is already in.

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New Money Spigots and Where Munitions Cash Lands The financing side is where things get interesting. McGinn pointed to Canadian Prime Minister Carney’s newly announced defense bank and the expanded U.S. loan authority as tools designed to attract private capital to the industrial base. The Pentagon’s FY2027 request backs this up with real dollars. The DoW budget book earmarks $20.2 billion for the Defense Credit Account and over $100 billion in Defense Industrial Base investments, including $72.3 billion for Industrial Base Analysis and Sustainment and Defense Production Act Title III. That is munitions and hypersonics money.

Which brings you to Kratos Defense & Security Solutions (NASDAQ:KTOS), the pure-play beneficiary. CEO Eric DeMarco told investors on the Q1 call that “Fiscal 2027 National Security spend is currently projected to be $1.5 trillion, an approximate $400 billion increase above Fiscal Year 2026” and that the Department plans to spend the entire $156 billion Reconciliation Bill defense funding in fiscal 2026, covering Kratos’ Valkyrie CCA, solid rocket motors, and hypersonics.

Kratos beat Q1 EPS estimates by 23%, raised FY26 revenue guidance to $1.70-$1.76 billion, and announced a 100,000-square-foot expansion in Oklahoma City to boost Valkyrie production. The catch is valuation. The stock trades at a forward P/E of 62x and is down 39% YTD from its highs.

McGinn’s framework is the right one. Watch backlogs. Congressional and parliamentary votes come first, then contracts, then revenue. That sequence decides whether $50 billion of headlines becomes real EPS.

Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Lockheed Martin didn't make the cut. Grab the names FREE today.

Contact [email protected] for any questions or corrections.

So far this month, Cathie Wood's various Ark exchange-traded funds (ETFs) have bought about $9.1 million worth of stock in Kratos Defense & Security Solutions (KTOS +0.08%). With her recent buying, the position has grown to be the tenth largest across all Ark Invest ETFs, worth just north of $110 million as of the time of this writing.

That's a lot of enthusiasm for a defense company whose shares are down more than 33% this year. Yet even after that decline, it still trades at nearly 300 times trailing earnings -- a hefty premium. If you're wondering what Wood is seeing that other investors are overlooking, here are three reasons why the stock may be a buy.

Image source: Getty Images.

Drones have proven their worth The Iran and Ukraine wars have shown the importance of drones, which have evolved from expensive supporting assets into the central drivers of attrition, surveillance, and strategy on the 21st-century battlefield. Drones that are (relatively) cheap have often defeated costly electronic defense systems, inverting the economics of air defense.

Kratos specializes in tech-driven defense hardware, including artificial intelligence-controlled combat drones priced at $3 million to $5 million, significantly less expensive than manned fighter jets, which cost more than $100 million apiece. The company had a $2 billion backlog of orders as of the end of the first quarter, and the Pentagon's fiscal 2027 budget request includes more than $70 billion specifically for military drones and anti-drone weapon systems, the technologies that Kratos directly addresses.

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Kratos's Valkyrie XQ-58A has established the company's competitive edge as a proven supplier in the evolving drone warfare landscape. It's designed to fly sorties in conjunction with crewed fighter jets, during which it can scout ahead, absorb enemy fire, and deploy weapons.

The company, recognizing the rising demand for drones from the Pentagon and America's international allies, announced on July 6 that it is building a 106,000-square-foot expansion of its Oklahoma City manufacturing plant to increase jet drone production.

Kratos is a key player in the drone trend Kratos is seen as an Nvidia equivalent in the drone warfare arena -- a key player in a field where artificial intelligence capabilities are redefining operational effectiveness. As the U.S. military increases its use of drone technology, it is looking for cost-effective solutions of a type that larger defense contractors have struggled to provide.

Kratos is expected to face increased competition from the likes of General Atomics, Anduril Industries, and Boeing, but its specialization in affordability and its rapid product development cycles give it a strategic edge. As military operations continue to adapt to the realities of modern warfare, companies that can deliver effective solutions at lower costs will likely capture larger portions of defense spending.

Kratos is already financially on solid ground For the first quarter, Kratos reported revenue of $371 million, up 22.6% year over year, while earnings per share rose by 133% to $0.07. The company is forecasting full-year revenue between $1.7 billion and $1.76 billion, up 29% at the midpoint. It also predicts that its adjusted earnings before interest, taxes, depreciation, and amortization will land between $170 million and $176 million, up 44% at the midpoint.

The company isn't just a drone manufacturer; it has landed several high-value contracts across its core divisions this year, spanning space systems, rocket propulsion, air defense, and unmanned aerial targets.

Its biggest contract came in March from the U.S. Space Force, a $468 million follow-on Other Transaction Agreement. Kratos will build the essential ground management software and system infrastructure to support the military's Resilient Missile Warning and Tracking satellite constellation in medium Earth orbit.

Buying at the right time Wood knows a good deal when she sees it, and many of her Kratos buys this year have come after the stock has fallen. Kratos operates at the nexus of the long-term trend toward the greater use of unmanned defense hardware.

The company's focus on low-cost manufacturing is endearing it to the Pentagon, and its expansion plans put it on track to scale up drone production. It's also important to note that it has a relatively broad product base, including counter-drone technology and infrastructure that connects orbital satellites to military networks. That diversity should serve the company well in the long run.

While its high price-to-earnings ratio is concerning, it is seen as a growth stock with great long-term potential.

Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.

We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these earnings surprises.

Now that we know how important earnings and earnings surprises are, it's time to show investors how to take advantage of these events to boost their returns by utilizing the Zacks Earnings ESP filter.

The Zacks Earnings ESP, ExplainedThe Zacks Earnings ESP is more formally known as the Expected Surprise Prediction, and it aims to grab the inside track on the latest analyst estimate revisions ahead of a company's report. The idea is relatively intuitive as a newer projection might be based on more complete information.

The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction. The Zacks Rank is also factored into the ESP metric to better help find companies that appear poised to top their next bottom-line consensus estimate, which will hopefully help lift the stock price.

In fact, when we combined a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time. Perhaps most importantly, using these parameters has helped produce 28.3% annual returns on average, according to our 10 year backtest.

Most stocks, about 60%, fall into the #3 (Hold) category, and they are expected to perform in-line with the broader market. Stocks with a #2 (Buy) and #1 (Strong Buy) rating, or the top 15% and top 5% of stocks, respectively, should outperform the market, with Strong Buy stocks outperforming more than any other rank.

Should You Consider Kratos?The final step today is to look at a stock that meets our ESP qualifications. Kratos (KTOS - Free Report) earns a #3 (Hold) 30 days from its next quarterly earnings release on August 6, 2026, and its Most Accurate Estimate comes in at $0.14 a share.

Kratos' Earnings ESP sits at +4.25%, which, as explained above, is calculated by taking the percentage difference between the $0.14 Most Accurate Estimate and the Zacks Consensus Estimate of $0.13. KTOS is also part of a large group of stocks that boast a positive ESP. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.

KTOS is one of just a large database of Aerospace stocks with positive ESPs. Another solid-looking stock is TransDigm Group (TDG - Free Report) .

Slated to report earnings on August 4, 2026, TransDigm Group holds a #3 (Hold) ranking on the Zacks Rank, and its Most Accurate Estimate is $10.62 a share 28 days from its next quarterly update.

For TransDigm Group, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $10.26 is +3.54%.

KTOS and TDG's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.

Find Stocks to Buy or Sell Before They're ReportedUse the Zacks Earnings ESP Filter to turn up stocks with the highest probability of positively, or negatively, surprising to buy or sell before they're reported for profitable earnings season trading. Check it out here >>

Key Takeaways Kratos Defense is expanding unmanned systems and air defense through new contracts and production investments.KTOS grew first-quarter 2026 Unmanned Systems revenues, driven primarily by XQ-58A Valkyrie activity.KTOS faces supply-chain and cost pressures, though 2026 and 2027 EPS estimates project strong growth. Kratos Defense & Security Solutions, Inc.’s (KTOS - Free Report) shares have risen 23.6% over the past year compared with the Zacks Aerospace-Defense Equipment industry’s growth of 22.6%. The company continues to hold a leading position as the U.S. Army's principal supplier of unmanned target drones, with long-term demand supported by consistent U.S. defense budget allocations.
 

Image Source: Zacks Investment Research

Other defense equipment stocks have shown mixed performance over the past year. While Curtiss-Wright (CW - Free Report) has gained 54.7%, AeroVironment (AVAV - Free Report) declined 20.7%. Curtiss-Wright and AeroVironment are specialized defense technology companies that benefit from U.S. military modernization and rising defense spending, rather than being prime defense contractors.

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 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 a Counter-UAS award in March 2026 and teaming activity tied to the XQ-58A Valkyrie. In first-quarter 2026, Unmanned Systems revenues increased to $82.6 million from $63.1 million a year earlier, driven primarily by Valkyrie-related activity.

In July 2026, Kratos Defense received an approximate $36 million sole-source contract award for a new air defense missile system. The sole-source nature of the award indicates that Kratos Defense possesses specialized capabilities that the customer considered difficult to replace through competitive bidding, strengthening its reputation as a trusted supplier for sensitive national security programs. The contract also supports higher utilization of the manufacturing capacity that the company has been expanding in recent years, potentially improving operating leverage as production scales.

In June 2026, Kratos Defense announced its plans to significantly increase production capacity for its Spartan line of turbojet engines to support growing demand across missile and loitering munition programs. By increasing annual production capacity to 3,000 engines and investing ahead of demand through internally funded procurement of long-lead materials and supply-chain enhancements, Kratos Defense is improving its ability to deliver at scale while shortening lead times for customers.

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 $225.7 million as of March 29, 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 30.91% and 42.34%, respectively, year over year. 
 

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for Curtiss-Wright’s 2026 and 2027 EPS implies an increase of 14.7% and 11.7%, respectively, year over year. The consensus estimate for AeroVironment’s fiscal 2027 EPS indicates an increase of 4.5% year over year.  

KTOS’ Earnings Surprise HistoryThe company beat on earnings in each of the trailing four quarters, delivering an average surprise of 22.64%.

Image Source: Zacks Investment Research

KTOS’ Return on Equity Lower Than IndustryThe company’s trailing 12-month return on equity of 4.3% 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.

Image Source: Zacks Investment Research

KTOS Stock Trades at a DiscountIn terms of valuation, KTOS’ forward 12-month price/sales (P/S) is 5.33X, a discount to the industry’s average of 14.62X.

Image Source: Zacks Investment Research

What Should an Investor Do Now?Kratos Defense continues to strengthen its leadership in unmanned systems and air defense through new contract awards, strategic partnerships, and growing demand for its advanced autonomous and missile technologies. The company is also expanding its propulsion manufacturing capabilities, positioning itself to capture rising opportunities in missile, loitering munition, and next-generation defense programs.

Investors who already own this Zacks Rank #3 (Hold) stock may consider retaining their position, considering its price performance and strong earnings growth. Given its poor ROE, new investors may wait and look for a better entry point. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

SAN DIEGO, July 02, 2026 (GLOBE NEWSWIRE) -- Kratos Defense & Security Solutions, Inc. (Nasdaq: KTOS), a technology company in the defense, national security and global markets, today announced that it has recently received an approximate $36 million sole-source contract award for a new air defense missile system. Kratos is a recognized industry leader in the rapid engineering, development and production at scale of affordable military-grade hardware, products and systems, including for hypersonic, missile, radar, air defense, directed energy, high-powered microwave, counter unmanned aerial system (C-UAS), chemical, biological, radiological, and nuclear (CBRN), unmanned aerial drone, strategic, and other systems. 

Tom Mills, President of Kratos’ C5ISR Division, said, “Building military-grade hardware on schedule and on budget, hardware that must work every time, is hard, and is also a clear differentiating capability of Kratos. The entire C5ISR team is proud to have been selected for this critical national security program.”

Eric DeMarco, President and CEO of Kratos, said, “Kratos’ air defense related hardware, products, and systems business, both in the United States and internationally, is currently seeing increased demand from numerous customers for multiple systems, platforms and technologies. Over the past several years, Kratos has made significant investments in property, plant, equipment and facilities, which we are continuing as we are laser focused on supporting the United States Department of War and the rebuild and recapitalization of our nation’s defense industrial base.”

Work under this contract award will be performed at a secure Kratos manufacturing facility. Due to security related, competitive and other considerations, no additional information related to this program will be provided.

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 28, 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]

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

Closing slightly lower than its Friday close, Kratos Defense and Security Solutions (KTOS +5.88%) stock is flying higher today. In addition to a popular growth investor buying shares of the defense stock, investors are adding Kratos to their buy lists after learning that a U.S. ally is making a significant investment in drones to fortify its defenses.

As of 1:04 p.m. ET, shares of Kratos Defense are up 5.5%, after earlier rising 9.6%.

Image source: Getty Images.

Ark Invest increased its position to start the week After the market closed yesterday, Ark Invest, led by Cathie Wood, reported that it had bought 138,735 Kratos shares in its Ark Innovation ETF.

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Currently, Kratos has a 0.85% weighting in the Ark Innovation ETF, which targets disruptive businesses such as drone developer Kratos.

The other catalyst for the drone stock rising today comes from across the pond. The United Kingdom announced yesterday that the Prime Minister would speak at a defense contractor today, where he would announce an investment of 5 billion British pounds (about $6.6 billion) in drones for the U.K. military over the next four years, making it the largest ever drone investment in U.K. Armed Forces."

While Kratos doesn't specify which nations are customers of its drones, the company does acknowledge that it supplies U.S. allies.

Should investors take flight with Kratos stock? Unsurprisingly, Kratos stock is flying higher today with Ark Invest increasing its position and the U.K. making a sizable investment in drones -- just the latest reminder of how the technology is playing an increasingly important role in the defense industry. For investors seeking a defense stock that has strong growth potential, Kratos is worth a closer look.

Scott Levine 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 (KTOS 5.75%) stock fell 4.4% through 11:55 a.m. ET Thursday -- and it's no mystery why.

President Trump announced yesterday that the U.S. and Iran have signed an "interim agreement" to end their conflict. While it's hard to answer the age-old question "war, huh, what is it good for?" investors today seem to think ending the Iran war is bad news for Kratos stock.

Image source: Kratos Defense & Security.

Details on the agreement Details are in flux, and the interim agreement mainly kicks off 60 days of more intense negotiations surrounding the status of the Strait of Hormuz and the fate of Iran's nuclear weapons program. Still, the broad outlines today look like this:

The U.S. naval blockade on Iran will end. Iran may resume foreign sales of oil. Other countries' ships have 60 days' free passage through the Strait of Hormuz. S. sanctions on Iran will lift. Previously frozen Iranian bank accounts will unfreeze. And Iran will set up a $300 billion reconstruction fund. Not much of this is immediately relevant to Kratos stock, but knowing the details is important for context, so investors can gauge the chances that both sides will believe they're getting enough out of this peace deal for it to hold together.

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What this means for Kratos Defense stock So, how is the peace deal relevant to Kratos? Well, if peace holds and fighting doesn't resume, this might depress demand for new drones from Kratos. Kratos primarily focuses on producing target-practice drones, however, and also an advanced "loyal wingman" drone called the XQ-58A Valkyrie that isn't reported to have been used in the Iran conflict at all.

Since Kratos presumably made no sales when the war was "on," I wouldn't expect it to suffer any falloff in sales now that the war is "off" either.

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.

Key Takeaways AXON's Connected Devices revenues jumped 33% in Q1 2026, driven by TASER and counter-drone demand.Kratos grew Unmanned Systems and Government Solutions revenues, supported by a $2 billion backlog.AXON's software growth, collaborations and valuation compare favorably with Kratos' higher costs. Axon Enterprise, Inc. (AXON - Free Report) and Kratos Defense & Security Solutions, Inc. (KTOS - Free Report) are two prominent names operating in the aerospace and defense equipment industry. As rivals, both companies are engaged in producing highly engineered public security and defense solutions in the United States and internationally.

Both companies have been enjoying significant growth opportunities in the public safety and defense equipment industries on account of growing instances of terrorism and criminal activities and the expansionary U.S. budgetary policy. Let’s take a closer look at their fundamentals, growth prospects and challenges.

The Case for AxonAxon’s Connected Devices segment is thriving on the back of robust demand for TASER devices. Solid demand for virtual reality training services, TASER 10 products and counter-drone equipment has been supporting the segment’s growth. Segmental revenues surged 33% year over year in the first quarter of 2026, following an increase of 29.1% in 2025.

Axon introduced its next-generation body-worn camera, Axon Body 4, in 2023. With upgraded features such as a bi-directional communications facility and a point-of-view camera module option, this body camera is still generating significant demand, thus bolstering the segment’s growth.

In first-quarter 2026, revenues from the company’s TASER product line increased 19% year over year, driven by TASER 10, while those from the Personal Sensors surged 23%, led by Axon Body 4. Also, revenues from Platform Solutions product line soared 95%, supported by counter-drone equipment, Dedrone.

The Software & Services segment has been benefiting from solid growth in the aggregate number of users to the Axon network. After witnessing a year-over-year 39.6% jump in revenues in 2025, revenues from the segment increased 35% in the first quarter. The segment’s growth has been bolstered by continued momentum in digital evidence management and increased demand for premium add-on features.

AXON remains committed to strategic collaborations with other companies to expand its product offerings and customer base. In October 2025, Axon’s Dedrone business announced its partnership with TYTAN (a leading provider of interceptor systems for Group 3 drones). The integration of TYTAN’s kinetic interceptor technology enhanced Dedrone’s Counter-Unmanned Aircraft Systems (CUAS) mitigation capability, making it suitable to deploy against Group 3 threats.

The company’s Carbyne buyout (in February 2026) also enabled it to create Axon 911, a state-of-the-art, fully integrated solution that is designed to connect callers and responders instantly. The company currently expects revenues to increase approximately 30-32% year over year, higher than the 27-30% predicted earlier.

The Case for Kratos DefenseKratos Defense is a major 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 a Counter-UAS award in March 2026 and teaming activity tied to the XQ-58A Valkyrie. In first-quarter 2026, Unmanned Systems revenues increased to $82.6 million from $63.1 million a year earlier, driven primarily by Valkyrie-related activity.

Beyond unmanned systems, Kratos Defense is expanding into hypersonics, rocket systems, propulsion and microwave electronics. The company continues to reference orders for hypersonic vehicles such as Erinyes and DarkFury and ongoing development work in its Ghost Works organization. In the first quarter, Kratos Defense highlighted organic growth in parts of Kratos Government Solutions such as Defense Rocket Systems, Turbine Technologies and Microwave Products businesses. Kratos Government Solutions revenues rose to $288.4 million in the quarter from $239.5 million a year earlier.

Such a diverse product portfolio ushers in solid order flows for the company, which, in turn, resulted in a robust consolidated backlog worth $2 billion at the end of the first quarter of 2026. This implies solid revenue generation prospects for the company.

Kratos Defense is also investing in facilities and programs intended to support future production and test needs, including its hypersonic payload integration facility in Crane, IN. The company’s recent Orbit and Nomad acquisitions add capabilities in satellite communications systems and connected mobile operations centers, extending its customer reach within national security.

However, Kratos 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.

Price Performance
Image Source: Zacks Investment Research

In the past month, Axon shares have risen 9.7%, while Kratos Defense stock has lost 3.5%.

The Zacks Consensus Estimate for AXON & KTOSThe Zacks Consensus Estimate for AXON’s 2026 sales and earnings per share (EPS) implies year-over-year growth of 31% and 18.1%, respectively. Although the EPS estimates for 2026 have decreased over the past 60 days, the estimate for 2027 has increased.

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for KTOS’ 2026 sales and EPS implies year-over-year growth of 29.8% and 29.1%, respectively. KTOS’ EPS estimates have declined for both 2026 and 2027 over the past 60 days.

Image Source: Zacks Investment Research

Axon’s Valuation Attractive Than Kratos DefenseAxon is trading at a forward 12-month price-to-earnings ratio of 45.45X, while Kratos Defense’s forward earnings multiple sits much higher at 63.23X.

Image Source: Zacks Investment Research

Final TakeKratos Defense’s strength in both segments and strategic investments have been dented by rising costs, expenses and supply-chain disruptions, which might affect its margins and performance. Also, KTOS’ expensive valuation warrants a cautious approach for existing investors.

In contrast, Axon’s market leadership position and strength in TASER, counter-drone equipment and digital evidence management solutions provide it with a competitive advantage to leverage the long-term demand prospects in defense and security market. AXON holds robust prospects due to strong estimates, stock price appreciation, attractive valuation and better prospects for sales growth.

Given these factors, AXON seems to be a better pick for investors than KTOS currently. While AXON currently sports a Zacks Rank #1 (Strong Buy), KTOS has a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank stocks here.

Kratos Defense & Security Solutions (KTOS) is positioned to capture defense spending that legacy primes cannot match on cost or agility. KTOS benefits from three structural tailwinds: US drone procurement priorities, attritable warfare doctrine, and hypersonic systems moving to production. Q1 2026 results show 22.6% YoY revenue growth, 1.6x book-to-bill, record $2.01B backlog, and a $14B+ opportunity pipeline.

Kratos Defense & Security Solutions (KTOS 1.66%) stock soared 13.8% through 10 a.m. ET Thursday after The Wall Street Journal reported the Trump Administration may make financial investments in U.S. drone manufacturers.

The proposed subsidies appear designed to promote development of low-cost disposable attack drones commonly referred to as first-person view or "FPV," rather than the more advanced XQ-58 Valkyrie drone aircraft that is Kratos's marquee product. As such, the news may not apply to Kratos.

But then again, it might.

Image source: Kratos Defense.

What we know about the new drone plan As WSJ reports, the Trump administration is pursuing deals with "a group of drone companies." Privately held Performance Drone Works and Neros Technologies are believed to be two of the companies in the running for government cash, as is publicly traded Unusual Machines (UMAC 5.48%).

Kratos is not mentioned in the WSJ story.

That may sound dispositive, but negotiations are ongoing, and the Pentagon -- which would be responsible for making the investments -- is "continuing to vet the companies." Potentially, that could mean not all the named companies will get funding... or that Kratos won't.

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What's next for Kratos? If Kratos does win government support, what form might that take?

Prior investments by the Trump Administration have been styled as promoting industries critical to national security, while also creating the potential for the government to profit if the investments pay off. For example, when the Department of Energy awarded a 10-year supply contract to rare-earth element miner MP Materials (MP +0.20%) last year, it also demanded stock in MP.

Any deal with Kratos could take a similar form, or comprise loans conditioned on hitting milestones under the Drone Dominance Program, or no-strings-attached grants. For the time being, we simply don't know how this will play out -- but stay tuned.

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 recommends MP Materials. The Motley Fool has a disclosure policy.

Steve Eisman said on a recent podcast: “I’m sort of bewildered, given that there’s a war going on, why people would be selling defense stocks.” The reason that bewilderment matters to your portfolio is sitting on top of a wall of capital nobody is talking about.

Peter Arment, on the same segment, laid out the number: “$66 billion between 2020 and 2024 has come into the defense industry through venture capital and private equity.” Silicon Valley is rebuilding the Pentagon’s supply chain in real time, and the recent correction handed retail a window that doesn’t typically open twice.

1. Red Cat Holdings (RCAT): The Small-Cap Drone Pure-Play Start with the name nobody on CNBC is leading with. Red Cat Holdings (NASDAQ:RCAT) is the textbook “purpose-built, lower-cost” archetype Arment described. Its Black Widow ISR drone is the Army’s Short Range Reconnaissance winner, the Blue Ops unit is pushing into unmanned surface vessels, and CEO Jeff Thompson is openly chasing the Pentagon’s drone budget line. Thompson said: “Secretary of War Hegseth has signaled budget allocations of up to $74 billion for UAV and USV procurement… in this arena, the Factory is the Weapon.”

Q1 FY26 told you the volume curve is bending: revenue hit $15.47 million, up 849.3% year over year, gross margin flipped to 12.7% from negative 52.1%, and management is guiding to a $150 million to $180 million annual revenue target. The stock is already responding, up 78% year to date and 56% in the past week alone.

The catch is that RCAT is one product line. If you want the same drone tailwind with a balance sheet behind it, the next ticker is where the institutional money is hiding.

2. AeroVironment (AVAV): The Switchblade and BlueHalo Combination AeroVironment (NASDAQ:AVAV | AVAV Price Prediction) is the publicly traded proxy for the Anduril-adjacent ecosystem. Switchblade loitering munitions are the weapon the Pentagon actually orders by the thousand, and the BlueHalo acquisition that closed in May 2025 bolted on space, cyber, and directed-energy capabilities that fit exactly into the FY2027 Department of War priority stack.

The order book tells the story. Q3 FY26 produced revenue of $408.05 million, up 143.4% year over year, a record funded backlog of $1.10 billion, and year-to-date bookings of $2.1 billion at a 1.6x book-to-bill. The stock is still down 11% year to date despite ripping 31% in the past week, which is precisely the correction Eisman flagged. The COO bought 1,800 shares at $194.39 on April 13, 2026, then the stock surged.

Hardware is half the story. The other half is the software brain that tells every drone, satellite, and Switchblade where to point. That brings us to the heavyweight.

3. Palantir (PLTR): The Software Layer of the New Defense Stack Palantir (NASDAQ:PLTR) is Silicon Valley’s original defense disruptor. Maven Smart System, TITAN, and the Army’s next-generation battle command stack all run on Foundry and AIP. Every drone in this article eventually needs the data fusion layer Palantir sells, which is why CEO Alex Karp can plant a flag like this: “Palantir’s Rule of 40 score is now an incredible 127%… We are an n of 1.”

Q4 FY25 numbers were the kind that justify the multiple. Revenue of $1.41 billion grew 70% year over year, U.S. commercial revenue jumped 137% to $507 million, and GAAP operating income hit $575.4 million at a 41% margin. The complication is valuation. The stock trades at a P/E around 203 and is down 19% year to date, with Polymarket traders pricing only 29% odds of PLTR reclaiming $150 by month-end.

If you believe AI is the operating system of modern warfare, Palantir is the toll bridge. If you want the company actually launching the satellites that feed that software, keep reading.

4. Rocket Lab (RKLB): Vertically Integrated Space and Hypersonics Rocket Lab (NASDAQ:RKLB) sits on the Austin-to-Southern California corridor Arment described, and it just got picked for the program that defines the next decade of national security spending. CEO Peter Beck confirmed it: “selected to support the Department of War’s Space Based Interceptor program under Golden Dome for America in partnership with Raytheon.” Electron and HASTE launches are flying, Neutron medium-lift is on deck for later in 2026, and the satellite manufacturing arm is now writing eight-figure deals on its own.

The Q1 FY26 print backed it up. Revenue came in at $200.35 million, up 63.5% year over year, backlog grew 20.2% sequentially to $2.20 billion, and the $816 million Space Development Agency contract for 18 Tracking Layer Tranche 3 satellites is the largest single award in company history. The shares are up 112% year to date and 412% over the past year, and prediction markets already resolved every May upside target through $104 to YES.

One name remains, and it is the cleanest visual proof that the era of $100 million fighters is over.

5. Kratos Defense (KTOS): The Punchline of the “60 Primes” Thesis Kratos Defense & Security Solutions (NASDAQ:KTOS) is what Arment meant when he said “we’re going back to the ’80s, where there’s going to be 60 defense primes.” The Valkyrie XQ-58 is a jet-powered autonomous combat aircraft built to fly alongside crewed fighters, attritable on purpose, priced an order of magnitude below a manned platform. Add hypersonics, Zeus and Oriole solid rocket motors, and the jet engines that go inside everyone else’s drones, and Kratos is selling four of the FY2027 budget’s loudest line items at once.

CEO Eric DeMarco said: “Fiscal 2027 National Security spend is currently projected to be $1.5 trillion, an approximate $400 billion increase above Fiscal Year 2026.” Q1 FY26 already showed the operating leverage: revenue of $371 million, up 22.6% year over year, Unmanned Systems organic growth of 30.9%, and a 1.6x book-to-bill on $605.2 million of bookings. Valkyrie was just selected for the Northrop Grumman MUX TACAIR CCA program, with management planning to ramp production to roughly 40 aircraft per year by the end of 2027.

The setup: shares are down 14% year to date against an analyst target price of $113.05 on a stock trading near $65. I’ve been watching Kratos for the better part of two years, and this is the first quarter where the Valkyrie cadence, the hypersonic backlog, and the budget line items finally rhyme.

The Trade Setup The math is pretty simple.

Silicon Valley funneled $66 billion of venture and private equity capital into defense between 2020 and 2024, the FY2027 budget is opening a $400 billion delta above FY2026, and the publicly traded names that touch this capital stack just sold off into the news. The legacy primes are the share donors; these five sit on the receiving end of the share shift. Watch the FY2027 budget cadence and the next round of contract awards across these five names.

A month has gone by since the last earnings report for Kratos (KTOS - Free Report) . Shares have added about 11.2% in that time frame, outperforming the S&P 500.

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

Kratos Defense Q1 Earnings and Revenues Surpass Estimates

Kratos Defense & Security Solutions, Inc. reported first-quarter 2026 adjusted earnings of 16 cents per share, which beat the Zacks Consensus Estimate of 13 cents by 26.3%. The bottom line also increased 33.3% from the year-ago quarter’s 12 cents.

Kratos Defense reported GAAP earnings of 7 cents per share compared with 3 cents in the year-ago quarter.

KTOS’ Total RevenuesTotal revenues were $371 million, which outpaced the Zacks Consensus Estimate of $344 million by 7.7%. The figure also rose 22.6% from $302.6 million recorded in the year-ago quarter.

Operational Update of Kratos DefenseKratos Defense’s selling, general and administrative expenses increased 19.9% year over year. Research and development expenses rose 7% compared with the prior-year quarter. Depreciation expenses climbed 46.2% year over year.

Expenses related to the amortization of intangible assets rose 176.2% from the year-ago figure.

The company reported operating income of $4.7 million, which decreased from the year-ago quarter’s $6.6 million.

It posted a consolidated book-to-bill ratio of 1.6 to 1, with bookings worth $605.2 million.

The total backlog at the end of the first quarter of 2026 was $1.635 billion compared with $1.212 billion at the end of the fourth quarter of 2025.

KTOS’ Segmental PerformanceUnmanned Systems: Revenues from this segment totaled $82.6 million compared with $63.1 million in the year-ago quarter. The increase was primarily driven by Valkyrie-related activity.

Kratos Government Solutions: Revenues from this segment amounted to $288.4 million compared with $239.5 million in the year-ago quarter. This increase was due to organic revenue growth across its Defense and Rocket Support business, Turbine Technologies and Microwave Products businesses, with organic revenue growth rates of 45.8%, 20.3% and 12.3%, respectively, year over year.

Financial Details of KTOSAs of March 29, 2026, cash and cash equivalents totaled $1.46 billion, up from $0.56 billion as of Dec. 28, 2025.

The company reported other current liabilities of $24.4 million as of March 29, 2026 compared with $9 million recorded as of Dec. 28, 2025.

The net cash used in operating activities amounted to $27.4 million during the first three months of 2026 compared with $29.2 million in the same period of 2025.

Kratos Defense’s GuidanceKTOS projects second-quarter 2026 revenues to be in the range of $400-$410 million. The Zacks Consensus Estimate for revenues is pegged at $401.3 million, which is at the lower end of the company’s guided range.

KTOS now expects 2026 revenues to be in the $1.7-$1.76 million range compared with the previous range of $1,595-$1,675 billion. The Zacks Consensus Estimate for revenues is pegged at $1.68 billion, lower than the company’s guided range.

Kratos Defense now expects operating cash flows to be in the range of $60-$70 million and free cash flow use to be in the band of $85-$105 million for 2026.

How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a downward trend in fresh estimates.

The consensus estimate has shifted -44% due to these changes.

VGM ScoresAt this time, Kratos has a poor Growth Score of F, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a score of F on the value side, putting it in the bottom 20% quintile for value investors.

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 downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Kratos has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Key Takeaways KTOS grew Unmanned Systems revenues nearly 31% organically, led by the XQ-58A Valkyrie program.Government Solutions saw double-digit growth; Defense Rocket Systems revenues rose nearly 46%.KTOS targets about 40 Valkyrie aircraft annually by 2027-end and is expanding hypersonic investments. Kratos Defense & Security Solutions, Inc. (KTOS - Free Report) continues to gain momentum in its Unmanned Systems segment, one of the company's key growth drivers. Revenues from the business grew nearly 31% organically, primarily supported by increased activity on the XQ-58A Valkyrie program. The segment also returned to operating profitability, reflecting the benefits of higher production volumes, improved execution, and greater operating leverage as the program scales.

The company’s Government Solutions segment also posted solid results. Defense Rocket Systems, Turbine Technologies, and Microwave Products all generated double-digit growth, with Defense Rocket Systems revenues increasing nearly 46% year over year. These businesses are increasingly aligned with Pentagon priorities surrounding missile defense, hypersonic weapons, propulsion systems, and advanced radar technologies.

Management believes a broader recapitalization of the U.S. defense industrial base is underway. As a result, Kratos Defense is investing aggressively in manufacturing facilities, hypersonic integration capabilities, drone production capacity, propulsion technologies, radar programs, and microwave electronics infrastructure. The company expects these investments to position it for larger production opportunities over the next several years.

A particularly important long-term initiative is Kratos Defense’s plan to produce approximately 40 Valkyrie aircraft annually by the end of 2027. The company is also expanding investments in solid rocket motors, jet engines for drones and missiles, and hypersonic systems, all of which could benefit from increasing defense modernization efforts.

Defense Companies Benefiting From Similar TrendsOther defense companies positioned to benefit from growing investments in autonomous systems, missile defense, and next-generation military technologies include:

Lockheed Martin (LMT - Free Report) continues to expand its presence in missile defense, advanced aircraft, and hypersonic programs, making it a major beneficiary of modernization spending.

RTX Corporation (RTX - Free Report) remains a leading supplier of missile systems, radar technologies, and air defense solutions that are increasingly important in evolving military strategies.

KTOS Stock’s Earnings EstimatesThe Zacks Consensus Estimate for 2026 earnings per share indicates an increase of 32.73% year over year.

Image Source: Zacks Investment Research

KTOS Stock Trades at a DiscountIn terms of valuation, KTOS’ forward 12-month price-to-sales (P/S) is 5.75X, a discount to the industry’s average of 12.34X.

Image Source: Zacks Investment Research

KTOS Stock’s Price PerformanceIn the past three months, KTOS’ shares have lost 35.1% compared with the industry’s 0.2% decline.

Image Source: Zacks Investment Research

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.

Issued on behalf of VisionWave Holdings, Inc.

As governments race to field affordable counter-drone and tactical autonomy systems, a wave of defense-tech consolidation is rewarding companies that can bolt advanced AI onto proven sensing hardware — and VisionWave is seeking to put itself at the center of that trend.

, /PRNewswire/ -- USA News Group News Commentary — The defense and security technology sector has spent the past two years being reshaped by a single, stubborn reality: cheap, weaponized drones are now a battlefield and homeland-security staple, and the systems built to detect, track, and defeat them have become one of the fastest-growing niches in defense spending. Against that backdrop, VisionWave Holdings, Inc. (NASDAQ: VWAV) has moved to acquire a controlling interest in an established 3D perception company, signaling its intent to combine AI-driven sensing with proven imaging hardware at exactly the moment the market is paying up for that combination.

On June 8, 2026, Foresight Autonomous Holdings Ltd. (NASDAQ: FRSX) (TASE: FRSX) announced a definitive agreement under which VisionWave will make a strategic equity investment of up to $17.5 million, payable in shares of VisionWave common stock, reflecting a post-investment valuation of approximately $34 million for Foresight. The structure gives VisionWave a path to a controlling 52% stake in Foresight while keeping both companies operating as independent, publicly traded entities. News of the deal sent Foresight shares sharply higher on the day of the announcement, while VisionWave traded up as well — a notable reaction for a transaction that is being paid in stock rather than cash.

For VisionWave, the move is less about a single acquisition and more about positioning. The company has spent 2026 assembling a defense-and-sensing platform, and folding in a perception specialist with visible-light, infrared, and neuromorphic sensor technology gives it hardware to pair with its own AI and radio-frequency systems. In a sector where the U.S. government is actively weighing direct financial support for domestic drone and counter-drone firms, owning the full stack — sensors, AI, and RF — is increasingly the price of admission.

Inside the VisionWave–Foresight Transaction

According to the definitive agreement, the transaction is staged in two parts. In Stage 1, VisionWave will receive 46% of Foresight's issued and outstanding ordinary shares in exchange for VisionWave common stock with an aggregate value of approximately $15.5 million. Upon achievement of a defined commercial milestone — specifically, the commencement of a binding pilot project using the integrated Perception Platform — VisionWave will receive an additional 6% stake in exchange for additional VisionWave shares valued at approximately $2 million.

Governance follows the money. VisionWave will have the right to appoint two directors to Foresight's board upon the Stage 1 closing, and one additional director upon the Stage 2 closing. The companies have been explicit that both will continue to operate as independent, publicly traded entities, and that the transaction remains subject to all required regulatory, stock-exchange, and shareholder approvals, along with other customary closing conditions.

The strategic logic centers on integration. Through the collaboration, Foresight's high-resolution visible-light, infrared, and neuromorphic sensor technologies are expected to be combined with VisionWave's AI and radio-frequency-based perception systems. The stated goal is to create more intelligent, real-time perception solutions for defense and security applications — including counter-unmanned aircraft systems, tactical unmanned systems, border protection, and critical infrastructure monitoring.

"This strategic investment from VisionWave represents an important opportunity to combine our proven perception expertise with advanced AI technologies," said Haim Siboni, Chief Executive Officer of Foresight. "We believe that it positions Foresight to offer more sophisticated, AI-driven solutions for the growing defense and security markets, where real-time intelligent perception is increasingly critical."

VisionWave Holdings describes itself as a defense and advanced sensing technology company developing AI-driven, RF-based sensing, autonomy, and computational acceleration technologies for defense, homeland security, and commercial infrastructure applications. Its stated mission is to connect defense innovation with civilian progress through shared core technologies deployed across air, land, and sea — a framing that maps directly onto the dual-use demand now driving the sector.

CONTINUED … Read this and more news for VisionWave Holdings at: https://usanewsgroup.com/vwav-landing

Why the Timing Matters: A Sector Bid Up by Drone Dominance

The deal lands in the middle of a remarkable run for U.S. defense-technology equities tied to drones and counter-drone systems. The Pentagon's "Drone Dominance" initiative has set a target of fielding roughly 300,000 lower-cost autonomous systems by the end of 2027, backed by a multi-hundred-million-dollar budget line, and the administration has reportedly explored providing loans and even direct equity stakes to domestic drone manufacturers. That policy backdrop has repeatedly lifted an entire peer group of listed names in 2026.

The investment thesis VisionWave is leaning into is straightforward: as the threat environment intensifies and procurement accelerates, the companies that can deliver intelligent, real-time perception — not just a sensor or just an algorithm, but the integrated system — are the ones positioned to win recurring government and commercial business. By moving to control a perception specialist, VisionWave is attempting to graduate from an early-stage platform story into a company with deployable hardware and a clearer commercialization path.

It is worth being clear-eyed about scale. VisionWave is a small-cap, early-stage platform company, and its own filings caution that certain initiatives are early-stage and exploratory, with no assurance of material contributions. The Foresight transaction is also paid in stock, subject to multiple approvals, and structured around a milestone that has not yet been achieved. Those are real execution variables that investors should weigh against the strategic upside.

The Company VisionWave Now Keeps

VisionWave is seeking to put itself squarely alongside a peer set of listed defense-technology names that the market has been rewarding throughout 2026. The contrast in scale and approach across that group helps frame both the opportunity and the risk in VisionWave's strategy.

The following peer comparisons are provided for illustrative and contextual purposes only and do not imply that VisionWave will achieve similar results, valuations, contract awards, or performance. These companies are significantly larger, more established, and have substantially greater resources, revenue bases, operating histories, and market presence than VisionWave, an early-stage platform company. Investors should not assume that VisionWave's strategy or the Foresight transaction will produce comparable outcomes.

Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) sits at the large-program, system-integration end of the spectrum. On April 8, 2026, Kratos disclosed that it had been awarded an Other Transaction Agreement with a total potential value of up to $446.8 million, contingent on the exercise of all options, to serve as prime contractor on the U.S. Space Force's Ground Management and Integration agreement for the Resilient Missile Warning and Tracking program. Kratos is also closely watched for its XQ-58A Valkyrie "loyal wingman" program, which operates alongside manned fighter aircraft — a reminder of how much larger an established prime can be relative to an emerging platform company.

Red Cat Holdings, Inc. (NASDAQ: RCAT) anchors the tactical small-UAS and counter-drone side of the group. The company has been selected for the U.S. Army's Short Range Reconnaissance program of record and has pursued production work with Palantir on GPS-denied navigation. Red Cat's portfolio spans ISR and precision-mission drone families, illustrating how the market is assigning premium valuations to companies with both autonomy software and fielded hardware — the same dual-stack logic VisionWave is now pursuing through Foresight.

Ondas Holdings Inc. (NASDAQ: ONDS) has spent 2026 broadening from drone hardware into higher-margin defense software, most notably through a $196.6 million all-stock acquisition of defense software firm Omnisys. Ondas is positioned across multi-domain ISR, counter-UAS technologies, AI software, and defense communications infrastructure — a diversification path that, like VisionWave's, is built on the premise that integrated software-plus-hardware platforms command better economics than point products.

Unusual Machines, Inc. (NYSE American: UMAC) rounds out the comparison from the NDAA-compliant drone-parts manufacturing angle. The company has highlighted that its partner Powerus advanced to Phase II of the Defense Department's Drone Dominance Program with a low-cost, rapidly deployable, U.S.-manufactured drone platform. Unusual Machines underscores the supply-chain dimension of the sector's growth — the domestic-content and component sourcing that underpins the broader drone buildout VisionWave is aligning itself with.

Taken together, these names map the landscape VisionWave is entering: established primes with billion-dollar revenue bases, mid-cap autonomy and ISR specialists, and emerging suppliers. VisionWave is attempting to carve out a perception-platform position within that field, and the Foresight transaction is its clearest statement yet of how it intends to do so.

What Comes Next

With the definitive agreement signed, the near-term markers for investors are procedural and operational. The Stage 1 closing depends on regulatory, stock-exchange, and shareholder approvals. The Stage 2 stake hinges on the commencement of a binding pilot project using the integrated Perception Platform — the milestone that converts the partnership from a financing event into a commercial one. And the broader question is whether VisionWave can translate a controlling stake in a perception specialist into the kind of defense and security contracts that the sector's richer valuations are pricing in.

For a market that has spent 2026 bidding up anything connected to autonomous and counter-drone systems, VisionWave's play is a clean test of a simple thesis: that owning integrated perception — AI, RF, and proven sensors under one roof — is where durable value in defense technology is increasingly being created.

CONTINUED … Read this and more news for VisionWave Holdings at: https://usanewsgroup.com/vwav-landing

Track the signal, not the noise. Eagle Eye (eagle-eye.dev) delivers real-time investor intelligence across social, forum, and news sources.

CONTACT:

USA News Group
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SOURCES:

[1] Foresight Autonomous Holdings Ltd. — "Foresight Secures $17.5 Million Strategic Investment from VisionWave…" (GlobeNewswire, June 8, 2026; primary company release and source of all deal terms and the CEO quotation)

[2] Stocktwits / Yahoo Finance — "FRSX Stock Shoots Up 15% Today – Why Investors Are Cheering The Deal With VisionWave Holdings" (June 8, 2026):
https://finance.yahoo.com/markets/stocks/articles/frsx-stock-shoots-15-today-144908135.html

[3] The Globe and Mail — counter-drone sector commentary naming VWAV, KTOS, RCAT, ONDS, and UMAC (April 16, 2026):
https://www.theglobeandmail.com/investing/markets/stocks/KTOS/pressreleases/1344943/as-the-counter-drone-era-goes-mainstream-this-nasdaq-ai-defense-stock-just-landed-a-world-cup-deployment-order/

[4] Stocktwits — "Why ONDS, RCAT And Other Drone Stocks Are Surging In Overnight Trading" (Drone Dominance program, Omnisys acquisition; late May 2026):
https://stocktwits.com/news-articles/markets/equity/why-onds-rcat-and-other-drone-stocks-are-surging-in-overnight-trading/cZgi5MvResd

[5] CoinCentral — "Red Cat, Kratos and Unusual Machines Are Surging…" (Pentagon funding talks, program budget detail; June 2026):
https://coincentral.com/red-cat-kratos-and-unusual-machines-are-surging-is-this-the-start-of-a-drone-stock-supercycle/

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Nothing in this publication should be considered as personalized financial advice. We are not licensed under securities laws to address your particular financial situation. No communication by our employees to you should be deemed as personalized financial advice. Please consult a licensed financial advisor before making any investment decision. This is a paid advertisement and is neither an offer nor recommendation to buy or sell any security. We hold no investment licenses and are thus neither licensed nor qualified to provide investment advice. The content in this report or email is not provided to any individual with a view toward their individual circumstances. USA News Group is a third party publisher and news dissemination service provider, which disseminates electronic information through multiple online media channels.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS:

This publication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include, without limitation, statements regarding the Foresight transaction (including Stage 1 and Stage 2 closings, milestone achievement, board appointments, and integration), expected benefits of combining technologies, potential commercial applications, market positioning, government support for drone/counter-drone initiatives, and the Company's ability to secure contracts or realize value from the investment.

These statements are based on the Company's current expectations and assumptions and are subject to substantial risks and uncertainties that could cause actual results to differ materially from those described. Forward-looking statements are generally identified by words such as "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect," "should," "would," "plan," "project," "forecast," "predict," "potential," "target," "seek," or similar expressions, or by statements that events, trends, or results "may," "will," "could," or "should" occur or be achieved.

Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to: risks related to the development, integration, and testing of advanced autonomous systems, AI, RF sensing, and computer vision technologies; the timing and successful closing of the Foresight transaction and any related milestones; regulatory, stock exchange, shareholder, and national security approvals; ability to secure government and defense contracts; market acceptance and competition; availability of capital; macroeconomic and geopolitical uncertainties; intellectual property risks; integration risks; delays in technical or commercialization milestones; dependence on key personnel and partners; and other risks detailed in the Company's filings with the U.S. Securities and Exchange Commission, including its most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K.

All forward-looking statements speak only as of the date of this publication and are expressly qualified in their entirety by the cautionary statements contained herein and in the Company's SEC filings. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required by law. Investors and readers are strongly cautioned not to place undue reliance on these forward-looking statements.

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