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Why Is Kratos (KTOS) Down 3.5% Since Last Earnings Report?
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It has been about a month since the last earnings report for Kratos (KTOS - Free Report) . Shares have lost about 3.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Kratos due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Kratos Defense Q3 Earnings Top Estimates, Revenues Lag
Kratos reported third-quarter 2021 adjusted earnings of 9 cents per share, which beat the Zacks Consensus Estimate by 28.6%. The bottom line was flat year over year.
Kratos Defense reported a GAAP loss of 2 cents per share against an earnings of 2 cents reported in the prior-year quarter.
Total Revenues
Total revenues were $200.6 million, which lagged the Zacks Consensus Estimate of $203 million by 1.3%. Total revenues decreased 0.7% from $202 million in the year-ago quarter. The slight year-over-year downside was due to lower legacy government services revenues, and reduced revenues from certain international contracts in the Training Solutions business, partially offset by increased revenues in the Space, Satellite and Cyber business.
Operational Update
Kratos Defense’s operating expenses were $50.1 million in the reported quarter compared with $44.4 million in the prior-year quarter. Selling, general and administrative expenses were up 19.6%, while research and development expenses increased 3.9% year over year.
The company reported third-quarter 2021 operating income of $10.5 million, down 17.3% from the year-ago quarter.
The company’s book-to-bill ratio for the third quarter of 2021 was 0.9 to 1.0 and 1.0 to 1.0 for 12 months ended Sep 26, 2021, with bookings of $770.9 million for the same period.
Total backlog for Kratos Defense at the end of the third quarter of 2021 was $839.1 million, down from $865.6 million at the end of the second quarter of 2021 and $873.1 million at the end of the third quarter of 2020.
Segmental Performance
Unmanned Systems: Net revenues during the third quarter increased 14.6% year over year to $61.3 million.
Government Solutions: Net revenues in the third quarter declined 6.2% year over year to $139.3million.
Financial Details
As of Sep 26, 2021, cash and cash equivalents were $369.9 million compared with $380.8 million as of Dec 27, 2020.
Long-term debt, including net of current portion, totaled $296.5 million as of Sep 26, 2021, down slightly from $301 million as of Dec 27, 2020.
As of Sep 26, 2021, cash generated from operating activities was $34.6 million compared with $19.1 million in the prior-year period.
Guidance
For fourth-quarter 2021, Kratos Defense expects to generate revenues in the range of $205 million to $215 million. The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $209.3 million, which is almost in line with the mid-point of the company’s projected range.
For 2021, the company continues to expect revenues to be $805-$815 million. The Zacks Consensus Estimate for full-year revenues stands at $809.3 million, which is almost at par with the mid-point of the company’s projected range.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -47.43% due to these changes.
VGM Scores
At this time, Kratos has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Kratos has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Why Is Kratos (KTOS) Down 3.5% Since Last Earnings Report?
It has been about a month since the last earnings report for Kratos (KTOS - Free Report) . Shares have lost about 3.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Kratos due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Kratos Defense Q3 Earnings Top Estimates, Revenues Lag
Kratos reported third-quarter 2021 adjusted earnings of 9 cents per share, which beat the Zacks Consensus Estimate by 28.6%. The bottom line was flat year over year.
Kratos Defense reported a GAAP loss of 2 cents per share against an earnings of 2 cents reported in the prior-year quarter.
Total Revenues
Total revenues were $200.6 million, which lagged the Zacks Consensus Estimate of $203 million by 1.3%. Total revenues decreased 0.7% from $202 million in the year-ago quarter. The slight year-over-year downside was due to lower legacy government services revenues, and reduced revenues from certain international contracts in the Training Solutions business, partially offset by increased revenues in the Space, Satellite and Cyber business.
Operational Update
Kratos Defense’s operating expenses were $50.1 million in the reported quarter compared with $44.4 million in the prior-year quarter. Selling, general and administrative expenses were up 19.6%, while research and development expenses increased 3.9% year over year.
The company reported third-quarter 2021 operating income of $10.5 million, down 17.3% from the year-ago quarter.
The company’s book-to-bill ratio for the third quarter of 2021 was 0.9 to 1.0 and 1.0 to 1.0 for 12 months ended Sep 26, 2021, with bookings of $770.9 million for the same period.
Total backlog for Kratos Defense at the end of the third quarter of 2021 was $839.1 million, down from $865.6 million at the end of the second quarter of 2021 and $873.1 million at the end of the third quarter of 2020.
Segmental Performance
Unmanned Systems: Net revenues during the third quarter increased 14.6% year over year to $61.3 million.
Government Solutions: Net revenues in the third quarter declined 6.2% year over year to $139.3million.
Financial Details
As of Sep 26, 2021, cash and cash equivalents were $369.9 million compared with $380.8 million as of Dec 27, 2020.
Long-term debt, including net of current portion, totaled $296.5 million as of Sep 26, 2021, down slightly from $301 million as of Dec 27, 2020.
As of Sep 26, 2021, cash generated from operating activities was $34.6 million compared with $19.1 million in the prior-year period.
Guidance
For fourth-quarter 2021, Kratos Defense expects to generate revenues in the range of $205 million to $215 million. The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $209.3 million, which is almost in line with the mid-point of the company’s projected range.
For 2021, the company continues to expect revenues to be $805-$815 million. The Zacks Consensus Estimate for full-year revenues stands at $809.3 million, which is almost at par with the mid-point of the company’s projected range.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -47.43% due to these changes.
VGM Scores
At this time, Kratos has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Kratos has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.