AEVEX (NYSE:AVEX) vs. Kratos Defense & Security Solutions (NASDAQ:KTOS) Critical Analysis

Kratos Defense & Security Solutions (NASDAQ:KTOS) and AEVEX (NYSE:AVEX) are both industrials companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, earnings, profitability and dividends.

Profitability

This table compares Kratos Defense & Security Solutions and AEVEX’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Kratos Defense & Security Solutions	2.03%	3.07%	2.55%
AEVEX	N/A	N/A	N/A

Analyst Recommendations

This is a summary of recent ratings and price targets for Kratos Defense & Security Solutions and AEVEX, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kratos Defense & Security Solutions	1	1	20	2	2.96
AEVEX	1	2	9	0	2.67

Kratos Defense & Security Solutions currently has a consensus target price of $94.16, suggesting a potential upside of 132.95%. AEVEX has a consensus target price of $32.56, suggesting a potential upside of 112.78%. Given Kratos Defense & Security Solutions’ stronger consensus rating and higher probable upside, equities analysts clearly believe Kratos Defense & Security Solutions is more favorable than AEVEX.

Earnings and Valuation

This table compares Kratos Defense & Security Solutions and AEVEX”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kratos Defense & Security Solutions	$1.35 billion	5.63	$22.00 million	$0.17	237.76
AEVEX	$697.02 million	2.50	$36.49 million	$0.32	47.81

AEVEX has lower revenue, but higher earnings than Kratos Defense & Security Solutions. AEVEX is trading at a lower price-to-earnings ratio than Kratos Defense & Security Solutions, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

75.9% of Kratos Defense & Security Solutions shares are held by institutional investors. 1.5% of Kratos Defense & Security Solutions shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

Kratos Defense & Security Solutions beats AEVEX on 12 of the 14 factors compared between the two stocks.

About Kratos Defense & Security Solutions

Kratos Defense & Security Solutions, Inc. engages in the provision of mission critical products, services and solutions for United States national security priorities. It operates through the Kratos Government Solutions (KGS) and Unmanned Systems (US) segments. The KGS segment consists of an aggregation of KGS operating segments, including microwave electronic products, space, satellite and cyber, training solutions. The US segment refers to the unmanned aerial, unmanned ground, unmanned seaborne and related command, control and communications system businesses. The company was founded on December 19, 1994, and is headquartered in Round Rock, TX.

About AEVEX

AEVEX Corp. is a holding company which designs, manufactures and provides autonomous systems and navigation technologies. The company’s operating segment includes tactical systems and global solutions. AEVEX Corp. is based in Solana Beach, California.