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Kratos Defense & Security Solutions

KTOS
39
Aerospace & Defense · Industrials
Also trades as: 0JS0.L GBP 0.38 (+1.67%)
Price
$38.68
+0.41 (+1.07%)
Market Cap
$7.26B
Exchange
NASDAQ
Winston Score
39
Winston is serious
Below-average fundamentals — multiple weak pillars.
Data as of Oct 25, 2026 · filings through Jun 28, 2026

§How the score breaks down

Quality
Weak
3/30
Growth
Exceptional
17/20
Cash Flow
Weak
0/10
Stability
Strong
8/10
Valuation
Good
5/10
Ownership
Mixed
4/15
Dividends
Not counted
n/a

37 of 95 counted points = Winston Score 39. Pillars marked n/a do not apply to this company and are left out of the total.

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Share count rising — dilution

+35.2% over 4y

The company has issued more shares over this period, which dilutes each existing shareholder’s stake.

Diluted shares outstanding: 128.0M (2021) → 173.1M (2025)

§Winston Score History

The full picture

Kratos Defense & Security Solutions is a US defense contractor that builds unmanned aerial vehicles (drones), rocket systems, satellite communications equipment, and cybersecurity tools for the US military and government agencies. Its most well-known products include the Valkyrie and Gremlins tactical drones, which are designed to fly alongside manned fighter jets as affordable, expendable wingmen. The company operates almost entirely within the US defense market.

Kratos earns money primarily through government contracts, selling hardware, systems, and related services to the US Department of Defense and other federal agencies. It operates mainly in the United States and generates roughly $1 billion in annual revenue. Its competitive edge comes from being one of the few companies focused on low-cost, high-performance unmanned systems at a time when the Pentagon is actively investing in drone technology. The main risk is that its margins remain thin, meaning any cost overruns on contracts or delays in program funding could quickly pressure profitability.

Growth Profile

When traditional metrics don't capture the full picture, these are the signals growth stock investors use instead.

Revenue Growth

+30.5% YoY

YoY Growth Rate

Revenue accelerating

Reported EPS Growth

+0.0% YoY

Quarterly reporting periods ended:

29 Jun 2025: $0.02

28 Jun 2026: $0.02

Reported/statutory EPS, not adjusted or underlying earnings. One-off items can affect this figure. Provider rounding can affect the growth rate.

YoY Growth Rate

Reported EPS unchanged year over year

R&D Spend

$40M/ year

→ Flat (-1% vs prior year)

3.0% of revenue

Below sector average (4%)

Steady R&D investment year-over-year

Insider Activity

1.5%ownership

→ Flat

Insider ownership roughly steady over the past year

Cash Runway

5+ years

Quarterly Free Cash Flow

↓ Burn rate worsening

$1.4B cash & investments at current burn rate

Revenue accelerating

Kratos Defense & Security Solutions grew revenue 31% year-over-year and the growth rate is speeding up. That's the kind of momentum growth investors look for — the question is whether margins can follow.

The Winston Score above measures business quality today. Growth stocks often score lower because they invest in the future rather than maximising current profits. These metrics show what matters most for evaluating that future.

Score breakdown

Every number that matters to educated investors.

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Quality

Profit per sale
Gross Margin
21.8%
Thin — 21.8% gross margin
Profit after running costs
Operating Margin
-0.3%
Losing money on operations — -0.3%
Return on the money invested
ROCE
0.6%
Weak — 0.6% return on capital

ROIC between 0% and 5%. They earn a few cents back per dollar invested in the business.

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Growth

Sales growth
Sales YoY
+25.5%
Fast-growing sales (+25.5% YoY)
Profit growth
EPS YoY
+71.9%
Earnings growing fast (+71.9% YoY)

Earnings growing 25%+ a year. The compounder zone.

How steady the profit is
EPS Consistency
6/8 quarters
Earnings grew in most of the last 8 quarters

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Cash Flow

Profit that turns into cash
Cash Conversion
-128%
Weak — only -128% of profit becomes cash
Spare cash per sale
FCF Margin
-8.5%
Burning cash (-8.5%)

Free cash flow is negative. They are burning cash, not generating it.

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Stability

What it owes vs what it owns
Debt / Equity
0.06
Conservative — low debt load (0.06)
Covers its interest
Interest Cover
5.22x
Adequate interest coverage (5.2x)

Interest coverage between 3 and 8. Profits cover interest several times over.

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Valuation

Price vs profit
P/E Ratio (TTM)
225.0x
Expensive — P/E 225.0

P/E over 35. The market is pricing in heavy, sustained growth.

Cheaper or dearer next year
P/E vs Forward
+196.3
GROWING
Earnings expected to grow meaningfully — cheaper on forward P/E (225.0 → 28.7)

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Dividends

Not applicable for this business.
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