Kratos Defense & Security Solutions (NASDAQ:KTOS) Posts Earnings Results, Beats Expectations By $0.07 EPS

Kratos Defense & Security Solutions (NASDAQ:KTOS) released its earnings results on Tuesday. The aerospace company reported $0.21 EPS for the quarter, beating the consensus estimate of $0.14 by $0.07, FiscalAI reports. The company had revenue of $458.80 million for the quarter, compared to analyst estimates of $410.38 million. Kratos Defense & Security Solutions had a net margin of 2.08% and a return on equity of 2.82%. The firm’s quarterly revenue was up 30.5% compared to the same quarter last year. During the same quarter last year, the firm earned $0.11 EPS.

Here are the key takeaways from Kratos Defense & Security Solutions’ conference call:

• Positive Sentiment: Kratos reported Q2 revenue of $458.8 million, up 19.1% organically year over year, while adjusted EBITDA of $38.2 million exceeded guidance. Management raised its full-year 2026 organic revenue growth outlook to 19%-23% and expects further growth and margin expansion in the second half and into 2027.
• Positive Sentiment: Hypersonics is expected to remain a major growth driver, with revenue projected to rise from approximately $200 million in 2025 to $400 million in 2026 and at least $700 million in 2027. The company cited new awards, approximately $400 million in recent hypersonic and related funding, and an operational Indiana integration facility supporting higher production rates.
• Positive Sentiment: Kratos is preparing for substantial engine demand tied to low-cost cruise missiles and future JASSM/LRASM production. It has begun ordering components for 3,000 Spartan turbojet engines targeted for 2027 and plans to support an additional 5,000 in 2028, while its GE turbofan partnership is expected to enter production beginning in 2028.
• Positive Sentiment: The company highlighted expanding opportunities across space, counter-UAS, directed energy, and unmanned systems, including a $160 million initial directed-energy award, a $100 million space-domain-awareness production award, and expected additional Valkyrie and Marine Corps orders. Management also cited potential international demand, including Taiwan-related Tactical Firejet and Valkyrie opportunities.
• Negative Sentiment: Cash flow was pressured by rapid growth and investment, with Q2 operating cash flow of negative $11 million and free cash flow of negative $18.9 million. Total 2026 investment is expected to remain elevated at approximately $250 million-$270 million, while the stronger Israeli shekel is forecast to reduce full-year EBITDA by roughly $5 million-$7 million.

Kratos Defense & Security Solutions Trading Up 5.4%

NASDAQ:KTOS traded up $2.66 during mid-day trading on Tuesday, reaching $51.87. 6,320,061 shares of the company’s stock traded hands, compared to its average volume of 4,464,881. The company has a debt-to-equity ratio of 0.04, a current ratio of 5.63 and a quick ratio of 5.08. The firm has a market capitalization of $9.73 billion, a price-to-earnings ratio of 305.12 and a beta of 1.08. The company has a 50 day moving average price of $52.63 and a 200-day moving average price of $72.13. Kratos Defense & Security Solutions has a 12-month low of $43.09 and a 12-month high of $134.00.

Kratos Defense & Security Solutions News Summary

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

• Positive Sentiment: Kratos beat quarterly estimates. Second-quarter earnings were $0.21 per share, above the $0.14 consensus estimate, while revenue of $458.8 million exceeded expectations of $410.4 million. Kratos Second-Quarter Earnings Press Release
• Positive Sentiment: Revenue growth remained strong. Second-quarter revenue increased 30.5% year over year to $458.8 million, including 19.1% organic growth, reinforcing investor expectations for continued demand across Kratos’ aerospace, defense and drone-related businesses. Kratos Reports Second-Quarter 2026 Financial Results
• Positive Sentiment: Full-year revenue guidance was above consensus. Kratos projected fiscal 2026 revenue of approximately $1.8 billion, compared with analyst expectations of about $1.7 billion. Third-quarter revenue guidance of $460 million to $480 million also implies a midpoint modestly above the $462.8 million consensus estimate.
• Positive Sentiment: Analyst sentiment remains bullish. Cantor Fitzgerald maintained an “overweight” rating and indicated substantial potential upside despite lowering its price target from $115 to $100. Cantor Fitzgerald Kratos Price Target Update
• Negative Sentiment: The price-target reduction is a modest caution. Although Cantor remains positive on KTOS, lowering its target suggests analysts see some near-term valuation or execution risks after the stock’s earlier rally.

Insiders Place Their Bets

In other Kratos Defense & Security Solutions news, CFO Deanna H. Lund sold 5,000 shares of the business’s stock in a transaction on Wednesday, July 1st. The shares were sold at an average price of $52.85, for a total transaction of $264,250.00. Following the transaction, the chief financial officer directly owned 285,405 shares of the company’s stock, valued at approximately $15,083,654.25. The trade was a 1.72% decrease in their position. The sale was disclosed in a document filed with the Securities & Exchange Commission, which can be accessed through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, insider Steven S. Fendley sold 7,000 shares of the company’s stock in a transaction on Monday, July 27th. The stock was sold at an average price of $47.13, for a total transaction of $329,910.00. Following the completion of the transaction, the insider owned 295,120 shares of the company’s stock, valued at $13,909,005.60. This trade represents a 2.32% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders have sold a total of 139,036 shares of company stock valued at $7,799,667 over the last quarter. 1.50% of the stock is owned by company insiders.

Institutional Trading of Kratos Defense & Security Solutions

Institutional investors and hedge funds have recently bought and sold shares of the stock. Mcguire Capital Advisors Inc. purchased a new position in shares of Kratos Defense & Security Solutions during the 4th quarter worth approximately $25,000. Rakuten Securities Inc. bought a new position in shares of Kratos Defense & Security Solutions in the 2nd quarter worth approximately $31,000. Kemnay Advisory Services Inc. purchased a new position in shares of Kratos Defense & Security Solutions in the 4th quarter valued at approximately $37,000. NewEdge Advisors LLC boosted its position in shares of Kratos Defense & Security Solutions by 64.4% during the first quarter. NewEdge Advisors LLC now owns 1,315 shares of the aerospace company’s stock valued at $39,000 after purchasing an additional 515 shares in the last quarter. Finally, Parallel Advisors LLC boosted its position in shares of Kratos Defense & Security Solutions by 44.1% during the fourth quarter. Parallel Advisors LLC now owns 526 shares of the aerospace company’s stock valued at $40,000 after purchasing an additional 161 shares in the last quarter. 75.92% of the stock is currently owned by hedge funds and other institutional investors.

Analyst Upgrades and Downgrades

Several research analysts have recently commented on the company. Cantor Fitzgerald decreased their price objective on Kratos Defense & Security Solutions from $115.00 to $100.00 and set an “overweight” rating on the stock in a report on Tuesday. Piper Sandler dropped their target price on Kratos Defense & Security Solutions from $99.00 to $75.00 and set a “neutral” rating for the company in a report on Thursday, May 7th. Citigroup restated a “market outperform” rating on shares of Kratos Defense & Security Solutions in a research report on Tuesday, July 28th. Truist Financial upgraded shares of Kratos Defense & Security Solutions to a “strong-buy” rating in a report on Friday, May 1st. Finally, UBS Group reaffirmed a “neutral” rating and issued a $82.00 target price on shares of Kratos Defense & Security Solutions in a research note on Thursday, May 7th. Three equities research analysts have rated the stock with a Strong Buy rating, sixteen have assigned a Buy rating and four have issued a Hold rating to the company’s stock. According to data from MarketBeat, Kratos Defense & Security Solutions presently has an average rating of “Moderate Buy” and an average price target of $100.41.

About Kratos Defense & Security Solutions

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

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