We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
KTOS Stock Rises 280.4% in a Year: Buy, Sell or Stay Invested?
Read MoreHide Full Article
Key Takeaways
Kratos Defense shares soared 280.4%, far outpacing the aerospace-defense equipment industry.
KTOS secured a $1.45B MACH-TB 2.0 award and expanded in hypersonics with a new Indiana facility.
KTOS' 2025 sales projection is up 15.7% and EPS is up 4.1%, though shares trade at a valuation premium.
Kratos Defense & Security Solutions, Inc. (KTOS - Free Report) shares have rallied 280.4% over the past year compared with the Zacks Aerospace-Defense Equipment industry’s growth of 34%. The company gains from being the U.S. Army’s primary unmanned aerial target drone provider, with its growth prospects backed by America’s stable funding provisions.
Image Source: Zacks Investment Research
Other defense equipment stocks, such as AAR Corporation (AIR - Free Report) and Rocket Lab USA, Inc. (RKLB - Free Report) , have also outperformed the industry in the past year. Shares of AIR and RKLB have gained 34.4% and 558.1%, respectively, during the same timeframe.
Considering Kratos Defense’s outperformance over its industry, investors might ask themselves whether this is a good time to add KTOS stock to their portfolio. Let's examine the factors that contributed to the share price gain and assess the stock's investment prospects to make an informed decision.
What Pushed KTOS Stock Up?
For an aerospace-defense equipment manufacturer like Kratos Defense, notable contract wins and the launch of new products serve as primary catalysts behind boosting investors’ confidence in these stocks, which result in solid share price appreciation.
In October 2025, Kratos Defense unveiled its innovative “Ragnarök” Low-Cost Cruise Missile (“LCCM”) system, representing a significant advancement in tactical strike capabilities. The Ragnarök LCCM features an optimized design that enables exceptional performance metrics for a system in its class.
In the same month, Kratos Defense secured the Phase 1 contract for developing an organic sustainment capability for the U.S. Navy’s AN/SPY-1 radar systems. Under Phase 1, Kratos will lead a cross-industry team to establish the foundation for the Integrated Radar Innovation Center at NSWC Crane — a specialized facility supporting AN/SPY-1 radar testing, repair, and prototyping.
In September, KTOS, in partnership with the National Chung-Shan Institute of Science and Technology, launched the Mighty Hornet IV Attack UAV, marking a revolutionary transformation of the MQM-178 target drone.
Impressively, the company started the year by clinching a $1.45 billion contract for the Multi-Service Advanced Capability Hypersonic Test Bed (MACH-TB) 2.0 program, marking the single largest award in Kratos Defense’s history.
These developments are likely to have bolstered KTOS’ share price performance over the past year.
Can KTOS Stock Continue With Its Rally?
As Kratos Defense focuses on diversifying its product line beyond drones, particularly in hypersonics, the company’s steady progress in hypersonic products is poised to boost its growth. To this end, it is imperative to mention that the company presently has orders for many Erinyes and DarkFury hypersonic vehicles. To further expand its support in this space, Kratos Defense broke ground on a 68,000-square-foot Hypersonic System Payload Integration Facility in Crane, IN, this March. The facility, involving $50 million of investment, will focus on payload activities, integration and testing.
For defense stocks like KTOS, a solid backlog count also reflects strong growth prospect traits. By the end of the second quarter of 2025, KTOS had a solid backlog of $1.41 billion, thanks to its diversified product portfolio. This implies solid revenue generation prospects for the company. Kratos expects to recognize nearly 36% of the total backlog as revenues in 2025, an additional 37% in 2026 and the balance thereafter.
Let’s see if KTOS’ near-term estimates reflect similar growth trends.
Estimates for KTOS Stock
The Zacks Consensus Estimate for KTOS’ 2025 sales indicates a year-over-year surge of 15.7%, while that for earnings per share (EPS) suggests a rise of 4.1%. The estimates for 2026 also reflect similar improvement on both counts.
Image Source: Zacks Investment Research
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for AAR’s fiscal 2026 sales indicates a year-over-year increase of 11.1%. The Zacks Consensus Estimate for Rocket Lab’s 2025 sales indicates a year-over-year increase of 35%.
Headwinds for KTOS
Although Kratos Defense shows notable growth prospects, it continues to face certain obstacles. One such obstacle is disruptions to the supply chain, arising from raw material shortages, which continue to impact the defense sector as a whole and might affect the company's operations.
Furthermore, Kratos' programs may see their funding cut, postponed, or eliminated due to current federal budget pressures, potential continuing resolutions, debt ceiling discussions, and the possibility of government shutdowns. The company's financial operations may suffer as a result of these concerns.
KTOS Stock’s Poor ROIC
The image below shows that KTOS stock’s trailing 12-month return on invested capital (ROIC) lags the peer group’s average. This suggests that the company's investments are not yielding sufficient returns to cover its expenses.
Image Source: Zacks Investment Research
KTOS Stock Trades at a Premium
In terms of valuation, KTOS’ forward 12-month price-to-sales (P/S) is 10.91X, a premium to the industry’s average of 9.87X.
Image Source: Zacks Investment Research
Rocket Lab is also trading at a premium to the industry, while AAR is trading at a discount at forward 12-month P/S.
What Should an Investor Do?
Kratos Defense is well-positioned for long-term growth, supported by its diverse product portfolio, strategic partnerships and solid backlog. However, considering its premium valuation and poor ROIC, new investors interested in this stock should wait for a better entry point.
However, those who already have this Zacks Rank #3 (Hold) stock in their portfolio may continue to retain it, considering the company’s impressive near-term year-over-year sales and earnings growth projection.
Image: Bigstock
KTOS Stock Rises 280.4% in a Year: Buy, Sell or Stay Invested?
Key Takeaways
Kratos Defense & Security Solutions, Inc. (KTOS - Free Report) shares have rallied 280.4% over the past year compared with the Zacks Aerospace-Defense Equipment industry’s growth of 34%. The company gains from being the U.S. Army’s primary unmanned aerial target drone provider, with its growth prospects backed by America’s stable funding provisions.
Image Source: Zacks Investment Research
Other defense equipment stocks, such as AAR Corporation (AIR - Free Report) and Rocket Lab USA, Inc. (RKLB - Free Report) , have also outperformed the industry in the past year. Shares of AIR and RKLB have gained 34.4% and 558.1%, respectively, during the same timeframe.
Considering Kratos Defense’s outperformance over its industry, investors might ask themselves whether this is a good time to add KTOS stock to their portfolio. Let's examine the factors that contributed to the share price gain and assess the stock's investment prospects to make an informed decision.
What Pushed KTOS Stock Up?
For an aerospace-defense equipment manufacturer like Kratos Defense, notable contract wins and the launch of new products serve as primary catalysts behind boosting investors’ confidence in these stocks, which result in solid share price appreciation.
In October 2025, Kratos Defense unveiled its innovative “Ragnarök” Low-Cost Cruise Missile (“LCCM”) system, representing a significant advancement in tactical strike capabilities. The Ragnarök LCCM features an optimized design that enables exceptional performance metrics for a system in its class.
In the same month, Kratos Defense secured the Phase 1 contract for developing an organic sustainment capability for the U.S. Navy’s AN/SPY-1 radar systems. Under Phase 1, Kratos will lead a cross-industry team to establish the foundation for the Integrated Radar Innovation Center at NSWC Crane — a specialized facility supporting AN/SPY-1 radar testing, repair, and prototyping.
In September, KTOS, in partnership with the National Chung-Shan Institute of Science and Technology, launched the Mighty Hornet IV Attack UAV, marking a revolutionary transformation of the MQM-178 target drone.
Impressively, the company started the year by clinching a $1.45 billion contract for the Multi-Service Advanced Capability Hypersonic Test Bed (MACH-TB) 2.0 program, marking the single largest award in Kratos Defense’s history.
These developments are likely to have bolstered KTOS’ share price performance over the past year.
Can KTOS Stock Continue With Its Rally?
As Kratos Defense focuses on diversifying its product line beyond drones, particularly in hypersonics, the company’s steady progress in hypersonic products is poised to boost its growth. To this end, it is imperative to mention that the company presently has orders for many Erinyes and DarkFury hypersonic vehicles. To further expand its support in this space, Kratos Defense broke ground on a 68,000-square-foot Hypersonic System Payload Integration Facility in Crane, IN, this March. The facility, involving $50 million of investment, will focus on payload activities, integration and testing.
For defense stocks like KTOS, a solid backlog count also reflects strong growth prospect traits. By the end of the second quarter of 2025, KTOS had a solid backlog of $1.41 billion, thanks to its diversified product portfolio. This implies solid revenue generation prospects for the company. Kratos expects to recognize nearly 36% of the total backlog as revenues in 2025, an additional 37% in 2026 and the balance thereafter.
Let’s see if KTOS’ near-term estimates reflect similar growth trends.
Estimates for KTOS Stock
The Zacks Consensus Estimate for KTOS’ 2025 sales indicates a year-over-year surge of 15.7%, while that for earnings per share (EPS) suggests a rise of 4.1%. The estimates for 2026 also reflect similar improvement on both counts.
Image Source: Zacks Investment Research
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for AAR’s fiscal 2026 sales indicates a year-over-year increase of 11.1%. The Zacks Consensus Estimate for Rocket Lab’s 2025 sales indicates a year-over-year increase of 35%.
Headwinds for KTOS
Although Kratos Defense shows notable growth prospects, it continues to face certain obstacles. One such obstacle is disruptions to the supply chain, arising from raw material shortages, which continue to impact the defense sector as a whole and might affect the company's operations.
Furthermore, Kratos' programs may see their funding cut, postponed, or eliminated due to current federal budget pressures, potential continuing resolutions, debt ceiling discussions, and the possibility of government shutdowns. The company's financial operations may suffer as a result of these concerns.
KTOS Stock’s Poor ROIC
The image below shows that KTOS stock’s trailing 12-month return on invested capital (ROIC) lags the peer group’s average. This suggests that the company's investments are not yielding sufficient returns to cover its expenses.
Image Source: Zacks Investment Research
KTOS Stock Trades at a Premium
In terms of valuation, KTOS’ forward 12-month price-to-sales (P/S) is 10.91X, a premium to the industry’s average of 9.87X.
Image Source: Zacks Investment Research
Rocket Lab is also trading at a premium to the industry, while AAR is trading at a discount at forward 12-month P/S.
What Should an Investor Do?
Kratos Defense is well-positioned for long-term growth, supported by its diverse product portfolio, strategic partnerships and solid backlog. However, considering its premium valuation and poor ROIC, new investors interested in this stock should wait for a better entry point.
However, those who already have this Zacks Rank #3 (Hold) stock in their portfolio may continue to retain it, considering the company’s impressive near-term year-over-year sales and earnings growth projection.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.