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Other defense equipment stocks, such as AAR Corporation ((AIR - Free Report) ) and Curtiss-Wright Corporation ((CW - Free Report) ), have also outperformed the industry in the past month. Shares of AIR have gained 4.4%, while shares of CW have gained 3%.
With KTOS’ robust performance on the bourses, some investors may consider buying the stock right away. However, before taking any decision, it is important to understand the reasons behind this robust performance. Does the company have what it takes to continue this momentum, or are there risks that may affect its future growth? The idea is to help investors make a more insightful decision.
What Pushed KTOS Stock Up?
Kratos Defense’s share gains over the past month seem to be supported by its strong quarterly results, improved guidance and a few notable collaborations. In the second quarter of 2025, the company reported revenues of $351.5 million, beating estimates by 14.6%. Its earnings also came in above expectations, which likely added to investor confidence.
The company also raised its full-year 2025 revenue outlook, which signaled stronger-than-expected business momentum. In addition, the sharp increase in its cash position during the quarter has further boosted confidence in its ability to fund ongoing and future projects.
Among notable partnerships signed by KTOS recently, worth mentioning are its collaboration with hiSky, a leading provider of industrial satellite communications solutions, as well as Champion Tire & Wheel. Through its partnership with hiSky, Kratos Defense will integrate its OpenSpace platform with hiSky's satellite Internet of Things (IoT) solutions, enabling scalable, cost-effective industrial IoT services for defense and commercial markets—expanding KTOS' reach in next-gen satcom.
On the other hand, KTOS’ Kratos joined hands with Champion Tire to debut driverless truck platooning at NASCAR, showcasing its defense-to-commercial autonomous tech for logistics—proving scalability in high-speed, real-world operations.
What Lies Ahead for KTOS Stock?
Kratos Defense is positioned for steady long-term growth with its wide range of products in unmanned systems, hypersonics and propulsion. The company is expanding its drone programs with models like Air Wolf, Athena, Thanatos and Apollo, alongside its well-established Valkyrie systems. It expects to secure a sole-source contract for the Air Wolf tactical jet drone by the end of 2025, which could lead to production starting in late 2026.
In the hypersonics field, Kratos Defense is developing systems such as Erinyes, DarkFury and Icarus. In March 2025, it opened a $50 million Hypersonic System Indiana Payload Integration Facility, which is expected to increase production capacity for important programs like MACH-TB.
The company is also partnering with GE Aerospace to develop low-cost jet engines for unmanned aerial systems, adding to its propulsion capabilities. With a $1.41 billion backlog and a clear schedule to deliver on these orders over the next two years, Kratos Defense’s revenue generation prospects remain strong.
Challenges For KTOS
Despite the aforementioned growth opportunities, Kratos Defense faces supply-chain issues, a challenge faced by the majority of its industry peers in terms of raw material unavailability. Labor shortages and rising costs due to inflation may also impact its profit margins and cause delays in delivering projects. Additionally, any changes in U.S. defense spending policies or budget cuts could reduce the number of new contracts available.
KTOS’ Near-Term Estimates
The Zacks Consensus Estimate for KTOS’ 2025 revenues indicates a solid improvement of 15.2% from the prior-year level. The estimate for its earnings is in line with the prior-year quarter.
Image Source: Zacks Investment Research
However, the downward revision in its third-quarter earnings estimate over the past 60 days reflects declining analysts' confidence in its near-term earnings growth prospects. The annual estimates remained stable over the past 60 days.
Image Source: Zacks Investment Research
KTOS Shares Trading at a Premium
KTOS shares are trading at a premium, with its forward 12-month Price/Sales (P/S F12M) being 7.53X compared with its peer group’s average of 3.40X.
Image Source: Zacks Investment Research
Its industry peers, AIR and CW, are trading at a discount in comparison with KTOS. AIR is trading at a P/S F12M of 0.96X, while CW is trading at a P/S F12M of 5.36X.
Conclusion
Investors interested in KTOS should wait for a better entry point, considering its premium valuation and declining near-term earnings estimates. However, those who already own this Zacks Rank #3 (Hold) stock may choose to maintain their positions, taking into account its solid long-term prospects, outperformance at the bourses and strong sales growth expectation.
Image: Bigstock
Kratos Defense Gains 27.5% in the Past Month: Should You Buy the Stock?
Key Takeaways
Shares of Kratos Defense & Security Solutions, Inc. ((KTOS - Free Report) ) have gained 27.5% in the past month against the 0.4% decline of the Zacks Aerospace-Defense Equipment industry. It also outperformed the Zacks Aerospace sector’s growth of 1.6% and the S&P 500’s rise of 3.2%.
Image Source: Zacks Investment Research
Other defense equipment stocks, such as AAR Corporation ((AIR - Free Report) ) and Curtiss-Wright Corporation ((CW - Free Report) ), have also outperformed the industry in the past month. Shares of AIR have gained 4.4%, while shares of CW have gained 3%.
With KTOS’ robust performance on the bourses, some investors may consider buying the stock right away. However, before taking any decision, it is important to understand the reasons behind this robust performance. Does the company have what it takes to continue this momentum, or are there risks that may affect its future growth? The idea is to help investors make a more insightful decision.
What Pushed KTOS Stock Up?
Kratos Defense’s share gains over the past month seem to be supported by its strong quarterly results, improved guidance and a few notable collaborations. In the second quarter of 2025, the company reported revenues of $351.5 million, beating estimates by 14.6%. Its earnings also came in above expectations, which likely added to investor confidence.
The company also raised its full-year 2025 revenue outlook, which signaled stronger-than-expected business momentum. In addition, the sharp increase in its cash position during the quarter has further boosted confidence in its ability to fund ongoing and future projects.
Among notable partnerships signed by KTOS recently, worth mentioning are its collaboration with hiSky, a leading provider of industrial satellite communications solutions, as well as Champion Tire & Wheel. Through its partnership with hiSky, Kratos Defense will integrate its OpenSpace platform with hiSky's satellite Internet of Things (IoT) solutions, enabling scalable, cost-effective industrial IoT services for defense and commercial markets—expanding KTOS' reach in next-gen satcom.
On the other hand, KTOS’ Kratos joined hands with Champion Tire to debut driverless truck platooning at NASCAR, showcasing its defense-to-commercial autonomous tech for logistics—proving scalability in high-speed, real-world operations.
What Lies Ahead for KTOS Stock?
Kratos Defense is positioned for steady long-term growth with its wide range of products in unmanned systems, hypersonics and propulsion. The company is expanding its drone programs with models like Air Wolf, Athena, Thanatos and Apollo, alongside its well-established Valkyrie systems. It expects to secure a sole-source contract for the Air Wolf tactical jet drone by the end of 2025, which could lead to production starting in late 2026.
In the hypersonics field, Kratos Defense is developing systems such as Erinyes, DarkFury and Icarus. In March 2025, it opened a $50 million Hypersonic System Indiana Payload Integration Facility, which is expected to increase production capacity for important programs like MACH-TB.
The company is also partnering with GE Aerospace to develop low-cost jet engines for unmanned aerial systems, adding to its propulsion capabilities. With a $1.41 billion backlog and a clear schedule to deliver on these orders over the next two years, Kratos Defense’s revenue generation prospects remain strong.
Challenges For KTOS
Despite the aforementioned growth opportunities, Kratos Defense faces supply-chain issues, a challenge faced by the majority of its industry peers in terms of raw material unavailability. Labor shortages and rising costs due to inflation may also impact its profit margins and cause delays in delivering projects. Additionally, any changes in U.S. defense spending policies or budget cuts could reduce the number of new contracts available.
KTOS’ Near-Term Estimates
The Zacks Consensus Estimate for KTOS’ 2025 revenues indicates a solid improvement of 15.2% from the prior-year level. The estimate for its earnings is in line with the prior-year quarter.
Image Source: Zacks Investment Research
However, the downward revision in its third-quarter earnings estimate over the past 60 days reflects declining analysts' confidence in its near-term earnings growth prospects. The annual estimates remained stable over the past 60 days.
Image Source: Zacks Investment Research
KTOS Shares Trading at a Premium
KTOS shares are trading at a premium, with its forward 12-month Price/Sales (P/S F12M) being 7.53X compared with its peer group’s average of 3.40X.
Image Source: Zacks Investment Research
Its industry peers, AIR and CW, are trading at a discount in comparison with KTOS. AIR is trading at a P/S F12M of 0.96X, while CW is trading at a P/S F12M of 5.36X.
Conclusion
Investors interested in KTOS should wait for a better entry point, considering its premium valuation and declining near-term earnings estimates. However, those who already own this Zacks Rank #3 (Hold) stock may choose to maintain their positions, taking into account its solid long-term prospects, outperformance at the bourses and strong sales growth expectation.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.