Why Kratos Defense Stock Just Dropped

Kratos Defense & Security (NASDAQ: KTOS) banal tumbled 7.5% done 10:05 a.m. ET Tuesday aft contempt beating connected some income and net past night.

Heading into Kratos's Q4 report, analysts forecast Kratos would gain $0.017 per stock connected income of $327.6 million. In fact, Kratos earned $0.18 per stock and reported quarterly income of $345.1 million.

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Despite beating forecasts, Kratos's Q4 show was "mixed." Sales grew nicely, up 22% twelvemonth implicit year. GAAP profits, however, were level against Q4 2024. (Kratos's "$0.18" nett was a non-GAAP number; existent net calculated nether mostly accepted accounting principles were lone $0.03.)

What's more, gross from drone income -- Kratos being chiefly known arsenic a shaper of drones for the subject -- grew lone 12%. Most of the maturation came from the Kratos Government Solutions business, "KGS," which focuses connected antiaircraft rockets, microwave products, and "space, grooming and cyber."

Free currency travel ran antagonistic for the quarter, and antagonistic $137.4 cardinal (or antagonistic $125.4 million, according to Kratos) for the year.

Was determination bully quality successful the report, too? Yes, determination was. Quarterly income maturation wide was strong, and KGS conception maturation was robust. Full-year income maturation wasn't overmuch worse astatine 17%.

Management besides highlighted a 1.1 book-to-bill ratio for the year, which strengthened to 1.3 successful the last quarter, lending assurance to its guidance for increasing income -- anyplace from $1.6 cardinal to $1.7 cardinal successful 2026. That works retired to astir 21% growth, which would beryllium amended than Kratos enjoyed successful 2025.

Ultimately, though, I conscionable can't urge buying a banal that costs 730 times earnings. Kratos banal remains a merchantability for me.

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