KTOS Nasdaq Russell 1000 Earnings call
Kratos Defense & Security Solutions (KTOS) · Q2 2026 results and valuation
Share price: $36.69 · 2026-11-11
Results Q2 2026 vs Q1 2026 · previous quarter · published 4 Aug 2026 and 6 May 2026
Net income down 63.0% on the previous quarter, guidance raised. Management sounded about as positive as a typical company call, in its script and in answers to analysts.
Only a basic analysis is available for this company at the moment.
1 · Numbers
−63.0%
Net income vs Q1 2026
Guidance raised
Net income 4.4M vs 11.9M
Revenue +23.7%
Against the same quarter last year (Q2 2025) it is +51.7%, so the move on last quarter looks seasonal or timing-related rather than a trend.
2 · How management spoke
Typical
More upbeat than 51% of company calls
Answers to analysts: restrained, in line with the script.
Similar to last call.
3 · What stood out
Figure
Kratos reported a last 12-month book-to-bill ratio of 1.3:1 and total last 12-month bookings of $1.99 billion to represent alignment for the quarter.
Valuation
Is Kratos Defense & Security Solutions undervalued?
Reverse DCF on net income from the last full fiscal year (no meaningful free cash flow: a bank, insurer or a year of negative cash flow) (2025-12-28), grown for 10 years, discounted back, plus a terminal value. “Implied growth” is the rate the current price assumes.
At 10.0% growth a year (3-year revenue growth), the model's fair value is $10.32 a share — the stock trades 255% above it. Today's price assumes 43.2% growth a year.
Current price
$36.69
close of 2026-11-11
Market implies growth of iThe yearly free-cash-flow growth, for the next 10 years, that today’s share price already assumes. If you believe the company grows faster than this, the stock is cheap under this model; slower, and it is expensive.
+43.2% for 10 yrs
Fair value / share
$10.32
Buy below
$7.74
Price vs fair value
Overvalued >200%
Price vs buy-below price
Overvalued >200%
Management expects
Revenue +19% · from the Q2 2026 report: “KTOS increased its forecasted full year 2026 organic revenue growth to between 19% and 23%.”
A guidance figure for revenue, usually one year ahead, not a 10-year free-cash-flow rate.
Read between the lines
-
Rising
Quarter revenues reached $458.8 million, exceeding the forecast of $400 million to $410 million and achieving a consolidated organic growth rate of 19.1%.
Source quote
“And as Eric mentioned, we continue to be on track to meet our previously reported full year 2026 revenue goal... In summary, our second quarter's performance exceeded our forecasted revenue and EBITDA targets. Revenues for the second quarter were $458.8 million, above our estimated range of $400 million to $410 million, with a consolidated organic growth rate of 19.1%, comprised of an...”
-
Guidance ↑
KTOS increased its forecasted full year 2026 organic revenue growth to between 19% and 23%.
Source quote
“We are increasing our forecasted full year 2026 organic revenue growth up to 19% to 23%.”
-
Guidance ↑
Kratos expects EBITDA margins to continue increasing in the second half of 2026 and into 2027 as business scales and production increases.
Source quote
“Kratos' EBITDA margins also are increasing and are forecast to continue to increase in the second half of '26 and into '27 as the business scales, production increases...”
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Fading
Margin gains are expected to continue through 2027 because production is ramping up and the business is scaling.
Source quote
“They took fixed price development contracts, building something that had never been built before. So this is why Boeing gotten so much trouble over all the years. And if you can't get it to work, you got to keep going.”
Tone
How upbeat the language was, compared with other companiesiTone counts positive minus negative finance words, adjusted for length. Executives mostly speak positively, so the labels compare each call with every company's latest call: “typical” is the middle third, “very upbeat” the top tenth, “cautious” the bottom tenth.. Dot: Q2 2026. Ring: Q1 2026.
Script and answers carried a similar tone, so the script's message held up under questioning.
Sentences that drove the tone
“We are generating and forecasting for increased margins while we are making significant investments as we pursue large new Department of War opportunities that are being presented to us and...”
“Kratos' EBITDA margins also are increasing and are forecast to continue to increase in the second half of '26 and into '27 as the business scales, production increases, and we...”
“And as Eric mentioned, we continue to be on track to meet our previously reported full year 2026 revenue goal of approximately 15% to 20% of organic revenue growth and...”
Full figures
USD · SEC EDGAR XBRL (10-Q, period end 2026-06-28)
| Metric | Q2 2026period end 2026-06-28 | Q1 2026period end 2026-03-29 | Change | Q2 2025 | YoY |
|---|---|---|---|---|---|
| Revenue | 458.8M | 371.0M | +23.7% | 351.5M | +30.5% |
| Gross profit | 100.1M | 89.6M | +11.7% | 73.8M | +35.6% |
| Operating income | -1.6M | 4.7M | Turned loss | 3.7M | Turned loss |
| Net income | 4.4M | 11.9M | −63.0% | 2.9M | +51.7% |
| EPS | 0.02 | 0.07 | −71.4% | 0.02 | ±0% |
| P/E today 247.2 | 277.7 | 423.2 | −145.5 | 458.4 | −180.7 |
Topics
Most discussed now
- Support the forecasted full year '26 growth as well as the estimated impact of foreign currency impacts, including on Kratos Defense &…
- The selling price average for these is $50,000 each.
- Kratos Defense & Security Solutions' forecast basically assumes there's going to be a Q4 CRA.
- Kratos Defense & Security Solutions is in pretty good shape on the $1 trillion spend for fiscal '26, which was $850 billion plus $150...
Faded since Q1 2026
- Fading Think of those, Noah, as primarily right now solid rocket motors for the hypersonic business right now.
- Fading In Unmanned Systems, Kratos Defense & Security Solutions' Unmanned Systems business was particularly strong in Q1.
- Dropped Kratos Defense & Security Solutions feels extremely strong on its forecast in its hypersonic business for the next several years.
- Dropped Kratos Defense & Security Solutions is totally vertically integrated on its tactical fire jet CCA right now.
Latest announcements
Official filings, newest first.
- Results of operations · SEC 8-K
- Shareholder vote results · SEC 8-K
- Results of operations · SEC 8-K
- Director or officer change · SEC 8-K
- Acquisition or disposal · SEC 8-K
- Material agreement; Other events · SEC 8-K
- Results of operations · SEC 8-K
- Material agreement; Other events · SEC 8-K