Kratos Defense & Security Solutions (NASDAQ:KTOS) Releases Earnings Results, Beats Expectations By $0.03 EPS

Kratos Defense & Security Solutions (NASDAQ:KTOS) released its quarterly earnings results on Thursday. The aerospace company reported $0.24 earnings per share for the quarter, beating the consensus estimate of $0.21 by $0.03, FiscalAI reports. Kratos Defense & Security Solutions had a net margin of 2.03% and a return on equity of 3.07%. The business had revenue of $471.80 million for the quarter, compared to analysts’ expectations of $471.40 million. During the same quarter in the previous year, the business posted $0.14 earnings per share. The firm’s revenue for the quarter was up 35.7% compared to the same quarter last year.

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

• Q3 results showed strong growth and demand: Revenue rose 35.7% year over year, including 23.2% organic growth, while adjusted EBITDA was $50.9 million. Bookings reached $1.04 billion, a 2.2-to-1 book-to-bill ratio, and backlog grew to a record $2.6 billion.
• Kratos forecast 18%-22% revenue growth in 2027, with revenue of $2.1 billion-$2.2 billion and adjusted EBITDA of $230 million-$240 million. Management called the initial outlook conservative, citing budget uncertainty and supply-chain challenges, and said its internal forecast is higher.
• Unmanned aircraft prospects strengthened: Kratos received a Valkyrie low-rate initial production contract, expects additional Valkyrie awards in 2027, and plans to roughly triple Firejet production capacity by the end of 2027. Management expects unmanned systems to be among the company’s strongest organic growers next year.
• Hypersonics and propulsion are positioned for substantial growth: Management expects about $700 million in hypersonics revenue in 2027 and cited several hundred million dollars of additional funding and three new program awards. The company is also preparing to build 3,000 turbojet engines in 2027, though it expects to deliver about 1,500 that year.
• Investment and execution risks remain: Q3 operating cash flow was negative $5.2 million and free cash flow was negative $29.4 million, while days sales outstanding rose to 125. Management said supply-chain and hiring constraints persist, and expects the company to become sustainably cash-flow positive in 2029 as production ramps.

Kratos Defense & Security Solutions Stock Performance

NASDAQ KTOS opened at $35.10 on Friday. The stock has a 50-day moving average of $43.48 and a 200 day moving average of $62.56. The company has a current ratio of 5.54, a quick ratio of 4.99 and a debt-to-equity ratio of 0.04. Kratos Defense & Security Solutions has a twelve month low of $31.57 and a twelve month high of $134.00. The stock has a market capitalization of $6.59 billion, a price-to-earnings ratio of 292.50 and a beta of 1.18.

Kratos Defense & Security Solutions News Roundup

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

• Positive Sentiment: Third-quarter adjusted EPS was $0.24, above the $0.21 consensus, while revenue rose 35.7% year over year to $471.8 million. Government Solutions growth was a key contributor. Kratos Defense Q3 Earnings Outpace Estimates, Revenues Increase Y/Y
• Positive Sentiment: Orders exceeded sales, with a 2.2-to-1 book-to-bill ratio and backlog reported at $2.65 billion—supportive of future revenue. Fourth-quarter revenue guidance has a $495 million midpoint, slightly above analyst expectations, and the company maintained a roughly $1.8 billion full-year revenue outlook. Kratos Sales Up 36%, Free Cash Flow Negative: Rapid Earnings Reaction
• Neutral Sentiment: Call-option trading activity was unusually high, up 44% versus its average volume. This may reflect increased investor interest but does not establish the direction of future performance.
• Negative Sentiment: Despite adjusted earnings growth, Kratos reported a small GAAP net loss, negative free cash flow, and a GAAP operating loss. These issues raise questions about near-term profitability and cash conversion. Kratos Q3 2026 Earnings Call Transcript
• Negative Sentiment: BTIG cut its price target to $65 from $104, although it retained a Buy rating. The reduction signals a more cautious valuation view even as the firm sees upside potential. BTIG Research ratings

Analysts Set New Price Targets

Several equities research analysts have recently commented on the company. Rothschild & Co Redburn initiated coverage on Kratos Defense & Security Solutions in a research note on Tuesday, October 6th. They set a “buy” rating and a $70.00 price target for the company. Weiss Ratings reissued a “sell (d+)” rating on shares of Kratos Defense & Security Solutions in a research note on Tuesday. Citigroup restated a “market outperform” rating on shares of Kratos Defense & Security Solutions in a research report on Monday, October 19th. Piper Sandler decreased their target price on Kratos Defense & Security Solutions from $75.00 to $61.00 and set an “overweight” rating for the company in a research report on Friday, October 23rd. Finally, Guggenheim assumed coverage on shares of Kratos Defense & Security Solutions in a research note on Monday, September 14th. They issued a “buy” rating and a $74.00 price objective for the company. Three analysts have rated the stock with a Strong Buy rating, twenty have assigned a Buy rating, one has assigned a Hold rating and two have assigned a Sell rating to the company’s stock. According to data from MarketBeat.com, the company presently has a consensus rating of “Moderate Buy” and an average target price of $81.70.

Insider Buying and Selling at Kratos Defense & Security Solutions

In other Kratos Defense & Security Solutions news, CEO Eric M. Demarco sold 300,000 shares of Kratos Defense & Security Solutions stock in a transaction on Friday, August 14th. The shares were sold at an average price of $64.33, for a total value of $19,299,000.00. Following the completion of the transaction, the chief executive officer owned 761,632 shares of the company’s stock, valued at $48,995,786.56. The trade was a 28.26% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the SEC, which is available through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, insider Phillip D. Carrai sold 26,500 shares of the stock in a transaction that occurred on Monday, August 17th. The shares were sold at an average price of $63.25, for a total value of $1,676,125.00. Following the transaction, the insider owned 182,084 shares in the company, valued at approximately $11,516,813. This trade represents a 12.70% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Over the last 90 days, insiders sold 373,013 shares of company stock worth $23,340,582. 1.50% of the stock is currently owned by insiders.

About Kratos Defense & Security Solutions

Kratos Defense & Security Solutions, Inc is a technology and defense contractor that develops systems and products for national security applications. The company supports the U.S. Department of Defense, intelligence agencies, national security-related organizations and selected commercial customers, with an emphasis on affordable, rapidly deployable technologies.

Its offerings include unmanned aerial and target systems, hypersonic and high-speed systems, rocket and propulsion technologies, satellite communications equipment, microwave electronics, radar and missile-defense systems, electronic warfare solutions, command-and-control systems, and virtual and live training products.