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Why Is Kratos (KTOS) Down 15.8% Since Last Earnings Report?
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A month has gone by since the last earnings report for Kratos (KTOS - Free Report) . Shares have lost about 15.8% 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 Q4 Earnings Top, Revenues Rise Y/Y
Kratos Defense & Security Solutions reported fourth-quarter 2023 adjusted earnings of 12 cents per share, up 50% from 8 cents reported in the prior-year quarter. The bottom line also surpassed the Zacks Consensus Estimate of 8 cents by 50%.
Kratos Defense reported GAAP earnings of 2 cents per share against a loss of 7 cents per share in the fourth quarter of 2022.
For 2023, the company recorded adjusted earnings of 42 cents, up from 32 cents reported in 2022.
Total Revenues
Total revenues were $273.8 million, which surpassed the Zacks Consensus Estimate of $252 million by 8.6%. The figure also increased 9.8% from $249.3 million recorded in the year-ago quarter.
The year-over-year improvement can be primarily attributed to the Kratos Government Solutions segment’s revenue growth.
For 2023, the company generated revenues worth $1.04 billion, up from the year-ago reported revenues of $0.90 billion.
Operational Update
Kratos Defense’s selling, general and administrative expenses went up 9% year over year, while research and development expenses were down 24.5%. Depreciation expenses increased 31.3%, while expenses related to the amortization of intangible assets surged 109.1%.
The company reported fourth-quarter 2023 operating income of $11.7 million, up 185.4% from the year-ago quarter’s actuals.
The company posted consolidated book-to-bill ratio of 1.2-1.0, with bookings worth $330 million for the fourth quarter.
The total backlog at the end of the fourth quarter was $1.24 billion compared with $1.17 billion at the end of the third quarter.
Segmental Performance
Unmanned Systems: Net revenues improved 12.1% year over year to $100.8 million.
Government Solutions: Net revenues increased 8.5% year over year to $173 million.
Financial Details
As of Dec 31, 2023, cash and cash equivalents totaled $72.8 million, down from $81.3 million as of Dec 25, 2022. The long-term debt amounted to $219.3 million as of Dec 31, 2023, down from $250.2 million recorded as of Dec 25, 2022.
During 2023, cashflow from operating activities totaled $65.2 million against cash outflow of $25.6 million in the previous year.
Guidance
Kratos Defense has provided its outlook for first-quarter and full-year 2024. For the first quarter, it expects revenues in the $240-$260 million range. The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $255.9 million, higher than the midpoint of the company’s guided range.
For 2024, Kratos Defense expects revenues in the range of $1,13-$1,15 million. The Zacks Consensus Estimate for full-year revenues is pegged at $1.10 billion, which lies lower than the company’s projected range.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -67.59% due to these changes.
VGM Scores
At this time, Kratos has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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. Notably, Kratos has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Kratos belongs to the Zacks Aerospace - Defense Equipment industry. Another stock from the same industry, Spirit Aerosystems (SPR - Free Report) , has gained 5.5% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Spirit Aerosystems reported revenues of $1.81 billion in the last reported quarter, representing a year-over-year change of +37.3%. EPS of $0.48 for the same period compares with -$1.46 a year ago.
Spirit Aerosystems is expected to post a loss of $0.21 per share for the current quarter, representing a year-over-year change of +87.6%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
Spirit Aerosystems has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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Why Is Kratos (KTOS) Down 15.8% Since Last Earnings Report?
A month has gone by since the last earnings report for Kratos (KTOS - Free Report) . Shares have lost about 15.8% 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 Q4 Earnings Top, Revenues Rise Y/Y
Kratos Defense & Security Solutions reported fourth-quarter 2023 adjusted earnings of 12 cents per share, up 50% from 8 cents reported in the prior-year quarter. The bottom line also surpassed the Zacks Consensus Estimate of 8 cents by 50%.
Kratos Defense reported GAAP earnings of 2 cents per share against a loss of 7 cents per share in the fourth quarter of 2022.
For 2023, the company recorded adjusted earnings of 42 cents, up from 32 cents reported in 2022.
Total Revenues
Total revenues were $273.8 million, which surpassed the Zacks Consensus Estimate of $252 million by 8.6%. The figure also increased 9.8% from $249.3 million recorded in the year-ago quarter.
The year-over-year improvement can be primarily attributed to the Kratos Government Solutions segment’s revenue growth.
For 2023, the company generated revenues worth $1.04 billion, up from the year-ago reported revenues of $0.90 billion.
Operational Update
Kratos Defense’s selling, general and administrative expenses went up 9% year over year, while research and development expenses were down 24.5%. Depreciation expenses increased 31.3%, while expenses related to the amortization of intangible assets surged 109.1%.
The company reported fourth-quarter 2023 operating income of $11.7 million, up 185.4% from the year-ago quarter’s actuals.
The company posted consolidated book-to-bill ratio of 1.2-1.0, with bookings worth $330 million for the fourth quarter.
The total backlog at the end of the fourth quarter was $1.24 billion compared with $1.17 billion at the end of the third quarter.
Segmental Performance
Unmanned Systems: Net revenues improved 12.1% year over year to $100.8 million.
Government Solutions: Net revenues increased 8.5% year over year to $173 million.
Financial Details
As of Dec 31, 2023, cash and cash equivalents totaled $72.8 million, down from $81.3 million as of Dec 25, 2022. The long-term debt amounted to $219.3 million as of Dec 31, 2023, down from $250.2 million recorded as of Dec 25, 2022.
During 2023, cashflow from operating activities totaled $65.2 million against cash outflow of $25.6 million in the previous year.
Guidance
Kratos Defense has provided its outlook for first-quarter and full-year 2024. For the first quarter, it expects revenues in the $240-$260 million range. The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $255.9 million, higher than the midpoint of the company’s guided range.
For 2024, Kratos Defense expects revenues in the range of $1,13-$1,15 million. The Zacks Consensus Estimate for full-year revenues is pegged at $1.10 billion, which lies lower than the company’s projected range.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -67.59% due to these changes.
VGM Scores
At this time, Kratos has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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. Notably, Kratos has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Kratos belongs to the Zacks Aerospace - Defense Equipment industry. Another stock from the same industry, Spirit Aerosystems (SPR - Free Report) , has gained 5.5% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Spirit Aerosystems reported revenues of $1.81 billion in the last reported quarter, representing a year-over-year change of +37.3%. EPS of $0.48 for the same period compares with -$1.46 a year ago.
Spirit Aerosystems is expected to post a loss of $0.21 per share for the current quarter, representing a year-over-year change of +87.6%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
Spirit Aerosystems has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.