Kratos Defense & Security Solutions, Inc. (KTOS): A Bull Case Theory

2 days ago 4

Ricardo Pillai

Thu, December 4, 2025 astatine 11:04 AM CST 3 min read

We came crossed a bullish thesis connected Kratos Defense & Security Solutions, Inc. connected Uncle Stock Notes’s Substack. In this article, we volition summarize the bulls’ thesis connected KTOS. Kratos Defense & Security Solutions, Inc.'s stock was trading astatine $76.10 arsenic of November 28th. KTOS’s trailing and guardant P/E were 585.38 and 158.73 respectively according to Yahoo Finance.

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Kratos Defense & Security Solutions, Inc., a exertion company, provides technology, products, and strategy and bundle for the defense, nationalist security, and commercialized markets successful the United States and internationally. KTOS has entered a decisive phase, transforming from a high-concept defense innovator into a revenue-generating company.

In Q3 2025, full gross roseate 26% year-over-year to $347.6 million, led by a 36% surge successful the unmanned systems conception driven by the accumulation and transportation of Valkyrie drones. The institution reported adjusted EPS of $0.14, exceeding expectations, and GAAP nett net of $8.7 million, marking a displacement into profitability.

This show reflects the execution of CEO Eric DeMarco’s imaginativeness of low-cost, AI-enabled expendable combat craft (CCA), present moving disconnected the conceptual signifier into existent production. While escaped currency travel remains antagonistic astatine $41 million, this is chiefly owed to $28 cardinal successful strategical superior expenditures to physique caller factories, supporting a grounds $1.48 cardinal backlog and a $13.5 cardinal bid pipeline.

Kratos’s Government Solutions (KGS) conception remains a unchangeable currency generator, benefiting from Defense Rocket Support Systems, hypersonic trial targets, and Space/communications projects, including power systems for outer constellations. The company’s semipermanent guidance is ambitious yet credible, with 15–20% gross maturation forecasted for 2026 and 18–23% for 2027, supported by some home request and caller planetary opportunities pursuing MTCR export regularisation adjustments.

Valuation investigation shows FY26 guardant P/S of 6.38x and a DCF-derived intrinsic worth of $70–$85 per share, indicating the banal is reasonably priced comparative to maturation potential. Risks see execution challenges successful scaling production, contention successful the CCA programme from Boeing and Lockheed Martin, and the timing of currency conversion. Nevertheless, Kratos is strategically positioned astatine the intersection of autonomous drones, hypersonic systems, and abstraction communications, offering important upside if it successfully navigates these maturation vectors.