Kratos Defense & Security Solutions (KTOS) is a Zacks Rank #1 (Strong Buy) that has a F for Value and a F for Growth.  The company is a supplier of mission critical products and services for the US national security.  The company has beat the Zacks Consensus Estimate in each of the last 15 quarters.  Let’s explore more about why this stock is the Bull of the Day.

Description                      

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.

Earnings History

When I look at a stock, the first thing I do is look to see if the company is beating the number.  This tells me right away where the market’s expectations have been for the company and how management has communicated to the market.  A stock that consistently beats has management communicating expectations to Wall Street that can be achieved.  That is what you want to see.

Kratos Defense & Security Solutions (KTOS) has a good earnings history with the company topping the Zacks Consensus Estimate in each of the last 15 quarters. 

The most recent earnings print saw the company posted EPS of 44 cents when the consensus was at 8 cents.  That 3 cent beat translates into a positive earnings surprise of 37.5%

Over the last four quarters the average earnings surprise works out to be 70.6%.

Earnings Estimates Revisions

Earnings estimate revisions is what the Zacks Rank is all about. 

Estimates are moving higher for Kratos Defense & Security Solutions (KTOS).

Following the recent beat, the estimates for this quarter have held still at $0.09.

Next quarter is also stagnant at $0.13

The full year 2024 estimate at $0.46.

Next year increased from $0.57 to $0.59.

All of the estimate moves have come in the last 60 days.

Growth

I see revenue in 2024 will come in around $1.14B which will end up being growth of about 10%.

2025 is calling for sales of $1.2B which represents 12.2% growth.

Valuation

The forward PE stands at 58x which is a little high given the lack of growth in the most recent earnings release.  The price to book multiple of 3.9x  is low enough to keep the value oriented investors interested in this stock.  Price to sales comes in at 4.6x. 

Margins have continued to inch higher and as they do, EPS will grow right along with it if there is revenue growth.

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