Kratos Defense & Security Solutions, Inc. research snapshot
KTOS AI stock analysis currently reads Kratos Defense as a high-optionality defense technology company with exposure to unmanned systems, hypersonics, rocket motors, space communications, microwave electronics, and propulsion. At the July 10, 2026 close of $48.19, verified market capitalization was about $9.03 billion on roughly 187.33 million shares. FY2025 revenue grew 18.5% to $1.347 billion, while GAAP net income was $22 million and free cash flow was negative after unusually heavy investment. Q1 2026 revenue rose 22.6% to $371 million, consolidated backlog reached $2.010 billion, and management raised FY2026 revenue guidance to $1.700 billion to $1.760 billion. The KTOS AI stock forecast uses scenario ranges because program awards, defense budgets, production execution, dilution, cash conversion, and valuation can change quickly. This page is informational research, not investment advice.
Current price
$48.19
Market cap
$9.03 billion verified market cap
AI score
56 / 100
Rating
High defense technology optionality, low current GAAP margin, and negative free cash flow
Trend status
Bearish medium-term, below the 50-day and 200-day averages and close to the 52-week low
Data cutoff (updated weekly)
July 12, 2026
Informational use only. This page is not investment advice.
| Dimension | Conclusion | Confidence |
|---|---|---|
| Business quality | Kratos sells mission-critical defense hardware, software, and systems across unmanned aircraft, rocket and hypersonic systems, satellite communications, microwave electronics, propulsion, and training. FY2025 revenue was $1.347 billion and Q1 2026 revenue grew 22.6%, but GAAP margins remain thin. | High |
| Moat | Program incumbency, security clearances, customer mission knowledge, specialized engineering, and products that are designed into military systems create switching costs. Network effects and consumer brand pricing power are limited, and large primes, venture-backed defense companies, and focused specialists can compete. | Medium-high |
| Management | Eric DeMarco has led Kratos as president and CEO for many years and has funded technology, manufacturing, Nomad, and Orbit expansion ahead of expected demand. The record also includes large equity raises and rising share count, so capital allocation must be judged on per-share returns rather than revenue growth alone. | Medium-high |
| Financial trend | Revenue grew from $811.5 million in FY2021 to $1.347 billion in FY2025, but net income was volatile and operating margin declined from 3.44% in FY2021 to 1.90% in FY2025. Q1 2026 revenue rose 22.6% and net income rose to $11.9 million, while operating cash flow remained negative. | High |
| Valuation | At $48.19, reported trailing PE is 280.79x and forward PE is 59.57x. PS is 6.38x, PB is 2.65x, and TTM FCF yield is negative 1.47%. The stock needs strong earnings growth and better cash conversion to create a margin of safety at this price. | High |
| Technical trend | KTOS closed at $48.19, below the 50-day average of $55.80 and 200-day average of $78.57. RSI was 39.35 and the stock was close to its reported 52-week range of $44.85 to $134.00, so a short-term bounce is not yet a confirmed trend reversal. | Medium |
| Risk level | Risk is high. About 68% of FY2025 revenue came from U.S. Government customers, contracts include fixed-price work, current expansion uses substantial cash, acquisitions add integration risk, and equity issuance has materially increased the share count. | High |
| AI confidence | Descriptive confidence is high because filings and market data are rich. Forecast confidence is lower because the opportunity pipeline is not the same as funded revenue, and technical data is a moving snapshot. | High data confidence |
| Investment certainty | The business has strategic relevance and growth potential, but investment certainty is low to medium until revenue growth produces durable operating leverage, positive free cash flow, and less dependence on equity financing. | Low-medium |
KTOS AI stock forecast
The KTOS AI stock forecast is scenario-based rather than a fixed price target. A tool-verified three-year model used approximate forward EPS of $0.81, implied by the published $48.19 price and 59.57x forward PE, then applied 36%, 24%, and 10% annual EPS growth with 80x, 55x, and 35x terminal PE assumptions. The resulting mechanical reference points were about $163.00 in the bullish case, $84.90 in the base case, and $37.70 in the bearish case before dividends. These ranges can be wrong and are not promises.
$130 to $175 before dividends
More likely if FY2026 revenue reaches or exceeds the $1.700 billion to $1.760 billion guide, Valkyrie, hypersonic, rocket, propulsion, and space programs scale on schedule, gross margin improves with volume, free cash flow turns positive, and dilution remains manageable while the market supports a high growth multiple.
$70 to $95 before dividends
More likely if the $2.010 billion backlog converts into revenue, bookings remain above 1.0x book to bill, FY2026 guidance is achieved, operating margins improve gradually, and valuation normalizes toward a 55x terminal PE as growth becomes more visible but less speculative.
$30 to $45 before dividends
More likely if awards or appropriations are delayed, fixed-price contracts create cost overruns, capital spending and working capital keep free cash flow negative, Orbit or Nomad integration disappoints, or additional equity issuance and multiple compression overwhelm revenue growth.
KTOS AI technical analysis
KTOS AI technical analysis is bearish on the medium-term chart as of the July 12, 2026 data cutoff. The July 10 close was below both reported moving averages and only modestly above the 52-week low. RSI was below 40, which shows weak momentum but does not by itself prove a durable bottom. The levels below are a monitoring framework based on the current chart snapshot, not guaranteed support or resistance.
| Level | Value | Why it matters |
|---|---|---|
| Reference price | $48.19 | July 10, 2026 Nasdaq close used as the price reference for this page as of the July 12, 2026 data cutoff. |
| Near support | $47.50 to $49.00 | The July 10 intraday low was $47.56. A close below this recent zone would show that short-term buyers are not defending the latest range. |
| Structural support | $44.85 | Reported 52-week low. A decisive close below this level would put the stock into price discovery and weaken the rebound thesis. |
| Moving averages | 50-day $55.80; 200-day $78.57 | StockAnalysis snapshot last checked July 11, 2026. Confirm live averages before treating a reclaim or crossover as current. |
| Near resistance | $55 to $57 | The 50-day average and the recent June trading area create the first meaningful recovery test. |
| Major resistance | $78 to $80 | This zone is near the 200-day average and would be a larger test of whether the medium-term downtrend has changed. |
| Momentum | RSI 39.35 | The July 11 StockAnalysis snapshot showed weak momentum below 50. RSI near 40 is not the same as a confirmed oversold reversal. |
| Volume | 2.37 million shares on July 10; 5.70 million 20-day average | A recovery through resistance would be more credible if volume expands toward or above the recent average. |
| Volatility | 52-week range $44.85 to $134.00; beta 1.07 | The stock was about 64% below its 52-week high at the data cutoff, showing that program and valuation expectations can reprice quickly. |
| Invalidation | Daily close below $44.85 | A close below the 52-week low invalidates this near-term support framework until a new base forms. |
KTOS AI trading strategy
The KTOS AI trading strategy is a rules-based monitoring framework, not personalized advice. Pair chart levels with backlog conversion, bookings, program awards, guidance, margin, cash flow, and share-count data instead of treating the chart alone as a signal.
Watch for a reclaim of $55 to $57 with volume near or above the 5.70 million 20-day average. Confirm that bookings remain above 1.0x book to bill, the $2.010 billion backlog converts, and management maintains the FY2026 revenue and adjusted EBITDA guidance.
Define position size and an invalidation level before entry. A failed reclaim followed by a close below $44.85 weakens the setup.
If KTOS holds the $44.85 to $49.00 area, review the next earnings release, cash use, capital spending, fixed-price contract performance, backlog funding, and dilution before treating a low RSI reading as an opportunity.
Do not average down solely because the stock is below its moving averages. A falling price can reflect weaker earnings quality, not just temporary sentiment.
Track FY2026 revenue against $1.700 billion to $1.760 billion, adjusted EBITDA against $170 million to $176 million, capital expenditures against $155 million to $165 million, free cash flow use against the $85 million to $105 million guide, backlog, book to bill, and shares outstanding.
Reduce confidence if revenue growth requires repeated equity raises, if operating margin does not improve with scale, if cash burn exceeds guidance, or if major program awards remain unfunded.
Investment research summary
Kratos is a defense technology and manufacturing company. Government agencies and prime contractors pay for affordable, rapidly fielded systems including target and tactical drones, hypersonic and rocket systems, satellite ground systems, microwave electronics, propulsion, and training products. The company earns revenue from both services and product sales, with KGS representing about 78% of FY2025 revenue and Unmanned Systems about 22%.
The strongest moat is program access and technical integration. Kratos has long customer relationships, security-cleared staff, specialized engineering, and products that can become designed into a program. Its 2025 10-K says U.S. Government customers represented about 68% of revenue and that the company has sole-source production positions for several target-drone programs. Brand pricing power and network effects are limited, while large primes and newer defense technology companies remain credible competitors.
The thesis can fail through budget delays, continuing resolutions, canceled or delayed program awards, fixed-price cost overruns, supply-chain constraints, slower Valkyrie or hypersonic production, failed R&D, acquisition integration problems, and more share issuance. The $14.3 billion bid and proposal pipeline is not the same as funded backlog, and the current valuation leaves little room for execution mistakes.
Eric DeMarco is president and CEO, and the company has consistently funded facilities, products, and engineering ahead of customer commitments. The 2025 equity raise and the 2026 offering strengthened the balance sheet and funded growth, but they also increased the share count. Nomad and Orbit expand communications and mission capabilities, while their returns will depend on integration and per-share earnings growth.
Defense recapitalization, autonomous systems, counter-drone capability, hypersonics, missile defense, rocket motors, secure space communications, and affordable mass production are long-term industry themes. Kratos has exposure to each, but the addressable opportunity is mediated by congressional appropriations, government acquisition choices, prime-contractor partnerships, and technical qualification. A large opportunity pipeline can still produce uneven revenue timing.
At $48.19, KTOS traded at 6.38x sales, 2.65x book value, 280.79x trailing earnings, and 59.57x forward earnings in the July 2026 market snapshot. TTM free cash flow was negative $132.9 million, so a conventional FCF yield was negative 1.47%. Margin of safety depends on earnings growing much faster than dilution and capital spending, not merely on the existence of a large defense pipeline.
Source-backed data
Every metric below includes a source and last verification date.
| Metric | Value | Source | Last verified |
|---|---|---|---|
| Reference price and market capitalization | $48.19 July 10, 2026 close; approximately $9.03 billion market capitalization | StockAnalysis and MarketBeat daily quote data | July 12, 2026 |
| Market-cap verification | $48.19 x 187.33 million shares = $9.03 billion, versus $9.03 billion reported; 0.03% variance | financial_rigor.py market-cap verification using StockAnalysis shares and reported market cap | July 12, 2026 |
| Shares outstanding | 187.33 million shares in the July market snapshot; SEC 10-Q reported 187.52 million shares outstanding as of May 1, 2026 | StockAnalysis KTOS statistics and SEC Form 10-Q | July 12, 2026 |
| Five-year revenue trend | Revenue grew from $811.5 million in FY2021 to $1.347 billion in FY2025. FY2025 growth was 18.5% and FY2025 gross margin was 22.86%. | Macrotrends and StockAnalysis annual financials, cross-checked to SEC 10-K | July 12, 2026 |
| FY2025 profitability and cash flow | GAAP net income $22.0 million, operating income $25.6 million, operating margin 1.90%, and StockAnalysis TTM free cash flow negative $132.9 million. | SEC 10-K, Macrotrends, and StockAnalysis cash flow data | July 12, 2026 |
| Q1 2026 financial results | Revenue $371.0 million, up 22.6% year over year; GAAP net income $11.9 million; adjusted EBITDA $38.7 million; organic revenue growth 15.8%. | Kratos Q1 2026 earnings release and SEC Form 10-Q | July 12, 2026 |
| Backlog, bookings, and pipeline | Q1 consolidated bookings $605.2 million, book to bill 1.6x, backlog $2.010 billion including $1.457 billion funded, and bid and proposal pipeline $14.3 billion. | Kratos Q1 2026 earnings release | July 12, 2026 |
| FY2026 company guidance | Revenue $1.700 billion to $1.760 billion, adjusted EBITDA $170 million to $176 million, capital expenditures $155 million to $165 million, and free cash flow use $85 million to $105 million. | Kratos Q1 2026 earnings release | July 12, 2026 |
| Cash, debt, and net cash | Q1 cash and equivalents $1.464 billion, total debt and finance lease obligations about $185.4 million, and net cash approximately $1.279 billion. The cash increase includes the 2026 equity offering and should not be read as operating cash generation. | SEC Form 10-Q and StockAnalysis balance sheet | July 12, 2026 |
| Customer concentration and segment mix | FY2025 revenue was $1.055 billion in Kratos Government Solutions and $292.0 million in Unmanned Systems. U.S. Government agency customers represented about 68% of total revenue. | SEC Form 10-K and Q1 2026 Form 10-Q | July 12, 2026 |
| Current valuation ratios | Trailing PE 280.79x, forward PE 59.57x, PS 6.38x, PB 2.65x, EV to sales 5.48x, TTM EPS $0.17, book value per share $18.20, and FCF per share negative $0.71. | StockAnalysis statistics; rounded source inputs checked with financial_rigor.py | July 12, 2026 |
| Technical snapshot | 50-day average $55.80, 200-day average $78.57, RSI 39.35, beta 1.07, 20-day average volume 5.70 million, and 52-week range $44.85 to $134.00. | StockAnalysis statistics and MarketBeat price history | July 12, 2026 |
| Management ownership and incentives | The 2026 proxy listed Eric DeMarco with 1,123,927 beneficial shares as of March 20, 2026. StockAnalysis reported insider ownership of 1.43% in its July snapshot. | Kratos 2026 proxy and StockAnalysis statistics | July 12, 2026 |
| Acquisition and financing context | Kratos completed the $352.7 million cash Orbit acquisition on March 2, 2026, acquired Nomad in February, and issued $1.3486 billion of common stock in Q1. The balance-sheet strength therefore came with meaningful dilution and integration obligations. | SEC Form 10-Q and Kratos public-offering disclosures | July 12, 2026 |
This KTOS research page is an informational tool, not investment advice or a recommendation to buy or sell any security. Forecasts are scenario calculations based on available data and assumptions, may be wrong, and can change quickly. Verify primary sources and consider qualified professional advice before making an investment decision.
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