Aerospace and defense company Kratos (NASDAQ:KTOS) will be reporting results tomorrow afternoon. Here’s what to expect.

Kratos met analysts’ revenue expectations last quarter, reporting revenues of $275.9 million, flat year on year. It was a mixed quarter for the company, with a solid beat of analysts’ EPS estimates but EBITDA guidance for next quarter missing analysts’ expectations.

Is Kratos a buy or sell going into earnings? Read our full analysis here, it’s free.

This quarter, analysts are expecting Kratos’s revenue to grow 5.1% year on year to $287.9 million, slowing from the 9.8% increase it recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.10 per share.

Analysts covering the company have generally reconfirmed their estimates over the last 30 days, suggesting they anticipate the business to stay the course heading into earnings. Kratos has missed Wall Street’s revenue estimates four times over the last two years.

Looking at Kratos’s peers in the defense contractors segment, some have already reported their Q4 results, giving us a hint as to what we can expect. Mercury Systems delivered year-on-year revenue growth of 13%, beating analysts’ expectations by 23.9%, and CACI reported revenues up 14.5%, topping estimates by 3.4%. Mercury Systems traded up 18.3% following the results while CACI was down 9.3%.

Read our full analysis of Mercury Systems’s results here and CACI’s results here.

Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market has been optimistic as of late due to a soft landing. This is an economic situation where rate hikes successfully quelled inflation but did not send the economy into a recession. Furthermore, recent rate cuts and Donald Trump's triumph in the 2024 Presidential election have been tailwinds for the market, and while some of the defense contractors stocks have shown solid performance, the group has generally underperformed, with share prices down 7.5% on average over the last month. Kratos is down 27.3% during the same time and is heading into earnings with an average analyst price target of $33.18 (compared to the current share price of $24.33).

Today’s young investors likely haven’t read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.