Kratos (KTOS)
The desk's stance
On our research list, not on the slate.
What the company does
Low-cost jet drones (Valkyrie) and hypersonics testing — cheap, attritable airpower.
In short: Unmanned systems and defense hardware. Category: Attritable Defense & Unmanned Systems. Sector: Industrials, Aerospace & Defense.
G-Street Value and Score
G-Street Value: $60.49, computed Oct 18, 2026 (confidence: low).
How we got there: 70% analyst leg $72.38 (5 analyst targets, credibility- and freshness-weighted, after 8% optimism discount, clamped to the full-street range) + 30% GainStreet factor value $32.74 (29.4× fwd EPS anchored to aerospace-defense multiples) — analyst and factor views diverge >50%, confidence reduced.
G-Street Score: 54 out of 100 (Weak).
- Top-line growth & guidance: 27 of 32
- Margin power: 0 of 15
- Revenue visibility & quality: 8 of 11
- Profitability & balance sheet: 15 of 24
- Capital allocation & governance: 0 of 6
- Valuation, sentiment & momentum: 4 of 12
Our current thesis
Updated Oct 18, 2026
The thesis
- Revenue growth accelerated to 30.5% YoY, driven by rocketry, turbine propulsion, and Valkyrie activity.
- Record $2.08B backlog and $1.44B cash balance de-risk multi-year capacity buildouts.
- Sub-tier supplier positioning captures broad missile and UAS demand without sole-platform risk.
Risks
- Persistent cash drain (-$118.3M LTM FCF) driven by heavy inventory and working capital needs.
- Paper-thin 2.0% net margins lag prime defense peers (RTX/LMT at 8%) significantly.
- At 36.3x forward earnings, valuation leaves little margin for execution or schedule slip.
What we're watching
- Q3 2026 earnings release on November 3, 2026, and initial 2027 guidance.
- Progression toward full-year guided adjusted EBITDA of $173M–$176M and FCF usage.
- Stock price action around the key $37.84 52-week low support level.
Latest
KTOS trades at $40.42, hovering near 52-week lows ($37.84) after a 51% one-year decline, despite Q2 revenue accelerating to $458.8M (+30.5% YoY) with four straight EPS beats. Top-line expansion is supported by rocket systems and turbine propulsion alongside a record $2.08B backlog and $1.44B in cash. However, persistent cash burn (-$118.3M LTM FCF) has triggered analyst target trims ahead of Q3 earnings on November 3, 2026.
Key numbers
As of Oct 16, 2026: market cap $7.6B · revenue growth +30.5% year over year · gross margin 23.0% · net margin 2.0% · forward P/E 36.3 · next earnings Nov 3, 2026.
Analyst price targets
Published analyst targets we could trace to a named source.
- Goldman Sachs, Buy: $77 target (October 2026). Source: www.tipranks.com
- Barclays, Overweight: $90 target (October 2026). Source: benzinga.com
- Jefferies, Buy: $68 target (October 2026). Source: stockanalysis.com
- Guggenheim, Buy: $74 target (September 2026). Source: benzinga.com
- Piper Sandler, Overweight: $75 target (August 2026). Source: benzinga.com
On the Gainz Lab maps
Who it does business with
- Kratos competes with Northrop Grumman — Drone wingmen. Kratos’ cheap Valkyrie drones compete for the collaborative combat aircraft mission.