Kratos Defense & Security Solutions, Inc. KTOS
Kratos delivered a strong Q2 2026 with revenue up 30.5% YoY to $458.8M and raised full-year guidance, backed by a $2.08B backlog and key contract wins including the JASSM engine EMD award and Valkyrie CCA demonstrations. However, FY2025 gross margin compressed to 22.15% from 25.28% in FY2024, free cash flow was deeply negative at -$137.4M, and the stock trades at 350x trailing PE versus a peer median of 16.3x.
With insiders net selling 961,649 shares over 24 months including CEO sales in August 2026, and the stock still roughly 17% below its 200-day MA of $73.24, the accelerating top line is genuine but the extreme valuation and cash burn profile argue for patience rather than adding at these levels.
What could go wrong
- Margin compression. FY2025 gross margin fell to 22.15% from 25.28% in FY2024 and 25.9% in FY2023 despite 18.5% revenue growth, suggesting scaling costs are outpacing pricing leverage.
- Valuation stretch. At 350x trailing PE, 7.46x PS, and 85.3x EV/EBITDA versus peer medians of 16.3x, 2.18x, and 13.7x respectively, the stock prices in sustained hyper-growth with little room for execution missteps.
- Persistent cash burn. FY2025 free cash flow was -$137.4M with capex surging to $95.3M from $58.2M in FY2024; FCF has been negative in four of the last five fiscal years.
- Insider selling. Insiders net sold 961,649 shares over 24 months, with CEO Eric DeMarco selling across multiple transactions on August 14, 2026 at $63-66 per share while the stock traded at $60.56.
What would change my mind
Where this comes from: Seeking Alpha news article, 2026-08-19 · Seeking Alpha news article, 2026-08-17 · FMP FY2025 annual fundamentals and derived_metrics · FMP FY2024 derived_metrics. Orin's read on KTOS; not advice.
Twelve months actual closes to 2026-09-24 · actual filings
50-day average 200-day average · volume below
On file
All KTOS filingsLargest holders · 13F Q2 2026
Money flow| Filer | Position | Of fund |
|---|---|---|
| State Street | $451.9M | 0.0% of fund |
| Vanguard Capital Management | $421.3M | 0.0% of fund |
| Vanguard Portfolio Management | $398.2M | 0.0% of fund |
| Invesco | $203.7M | 0.0% of fund |
| Geode Capital Management | $185.1M | 0.0% of fund |
| Alliancebernstein L.P | $157.3M | 0.1% of fund |
81 filers · quarter ended Q2 2026 · positions, not flows
Insiders, last 24 months: 950 Form 4 filings, net $769.5M. Of the 50 on hand, 0 were open-market purchases and 50 sales— the rest are grants, option exercises and tax withholding.
Ask Orin about KTOS
Orin answers questions about KTOS from its filings, transcripts and numbers — with the source behind every claim. Your own desk starts with 3 free days, card required.
Start 3 free days →Where it trades
| Metric | Now | Own median | Sector |
|---|---|---|---|
| P/E | 273.5× | — | 44.5× |
| EV/EBITDA | 63.9× | — | — |
| P/S | 5.79× | — | — |
| P/B | 2.6× | — | — |
What Wall Street published
$98
$74 – $135 · +112% against today's price
- 22 buy or overweight
- 3 hold
- 0 underweight or sell
The analysts’ consensus and their own ratings, not Orin’s. A target is a twelve-month opinion published by the firm that wrote it.
Against the companies it is compared to
| Company | Market cap | P/E | EV/EBITDA | Gross | Net | ROE |
|---|---|---|---|---|---|---|
| KTOSKratos Defense & Security Solutions, Inc. | $9B | 273.5× | 63.9× | 22.0% | 2.0% | 1% |
| APGAPi Group Corporation | $16B | — | 21.7× | 29.3% | 4.1% | 10% |
| AVAVAeroVironment, Inc. | $8B | — | — | 26.5% | -14.5% | -7% |
| GFLGFL Environmental Inc. | $15B | — | 16.8× | 20.0% | -3.3% | -3% |
| HIIHuntington Ingalls Industries, Inc. | $10B | 15.8× | 12.0× | 12.6% | 5.0% | 13% |
| LUVSouthwest Airlines Co. | $20B | 25.0× | 8.8× | 61.0% | 2.8% | 11% |
| TXTTextron Inc. | $13B | 14.3× | 9.1× | 16.5% | 6.1% | 12% |
| WWDWoodward, Inc. | $19B | 35.2× | 23.7× | 29.5% | 13.2% | 22% |
The median is of the 4 peers listed above and nothing else — check it against the column. This company trades 1238.8% above it. The peer set is the vendor’s, so a company can appear here that a person would not have chosen.
What it has traded at
What its sector has traded at
Two scales, drawn separately on purpose: a sector median and one company’s multiple are not the same number and putting them on one axis invites a comparison neither series supports.
Every estimate on one scale
The vertical rule is the current price. Ranges and point estimates are the backend’s, published as they were calculated; an arrow means the estimate sits beyond this scale, and its number is on the right.