Kratos Defense & Security Solutions Inc. Common Stock (KTOS)

FairStock Score: 31/100 — RISKY

Key Financials

Strengths

• Conservative balance sheet with debt-to-equity of just 0.07, providing financial flexibility
• Altman Z-Score of 16.0 confirms minimal bankruptcy risk and strong solvency
• Revenue growth of 21.9% demonstrates strong top-line momentum

Concerns

• Trades significantly above Graham Number ($6) with negative 1018% margin of safety—limited downside protection

AI Analysis

Kratos Defense & Security Solutions Inc. Common Stock is a mid-cap industrials company valued at $12.3 billion. The business generates $1.3 billion in annual revenue with a 0.4% net margin. From a quality standpoint, Kratos shows Altman Z-Score of 16.0 confirms fortress-level solvency and modest 1% ROE. On valuation, the stock is commanding a steep 504.0x multiple, with trades far above its Graham Number ($6) with no margin of safety. Growth dynamics show revenue growing at 21.9% and profit growth of 51.3%. Our composite FairStock Score of 31/100 reflects below-average fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Kratos's 22% revenue growth trajectory could accelerate as it captures additional market share in the industrials sector. Operational leverage in the business model means incremental revenue growth could disproportionately boost bottom-line profitability.

Bear Case

At 504x earnings, any growth disappointment triggers rapid multiple compression—a 20% earnings miss plus multiple contraction to 20x implies 40%+ downside. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer