At a glance
Kratos Defense & Security Solutions is worth $7.73B, about 317 times its fiscal 2025 earnings. Revenue grew 18.5% to $1.35B in fiscal 2025, with 1.6% kept as profit; over 5 years it has grown 12.5% a year. It pays no dividend. The stock returned −54.1% over the past year with dividends reinvested and +13.7% a year over five years, against +11.5% and +11.7% for the S&P 500. At its worst it fell 51.1% in the 2020 crash (S&P 500: 33.7%) and 57.4% in the 2022 bear market (S&P 500: 24.5%), and was back at its earlier high 6 months and 21 months after the lows.
The business in plain English
Kratos Defense & Security Solutions makes hardware, systems and software for defense, national security and commercial customers. Its products include jet-powered drones such as the Valkyrie, hypersonic vehicles and rockets, small jet engines for drones and missiles, microwave electronics for radar and missile-defense systems, satellite ground-control software, and virtual-reality training systems for troops. It pitches itself on affordability: products designed to be built quickly, in large numbers, at low cost.
The U.S. government provides a significant share of revenue. Kratos bids as the lead, or "prime," contractor when it likes its odds, and otherwise teams up with larger defense contractors. In the fiscal year ended December 28, 2025, revenue was $1.35 billion: 65% from products and 35% from services. The United States supplied 79%; Europe, Asia Pacific and the Middle East each added about 5% to 6%.
Of its two segments, Kratos Government Solutions brought in 78% of revenue. It includes microwave electronics, space and satellite systems, training, turbine engines, rocket support services and C5ISR (military shorthand for command, control, communications, computers, combat, intelligence, surveillance and reconnaissance). Unmanned Systems, at 22%, builds drones for air, land and sea and the systems that control them. Kratos is investing heavily to fill existing orders and expected new ones, including a hypersonic plant in Indiana and engine production in Michigan and Oklahoma.
Price history
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KTOS -54.1% over the year to Oct 28, 2026, total return with dividends reinvested.
How it makes money
By product or service
| Product sales | $877.8M | 65.2% |
| Service revenues | $469.0M | 34.8% |
By business segment
| Kratos Government Solutions | $1.05B | 78.3% |
| Unmanned Systems | $292.0M | 21.7% |
By geography
| United States | $1.06B | 79.1% |
| Europe | $78.1M | 5.8% |
| Asia Pacific | $71.2M | 5.3% |
| Middle East | $66.2M | 4.9% |
| Other | $46.9M | 3.5% |
| Other North America | $19.4M | 1.4% |
Latest results
- In Q2 FY2026 (ended Jun 28, 2026), revenue was $458.8M, up 30.5% from a year earlier, and net income was $4.4M (+51.7%).
- For fiscal 2025, revenue was $1.35B (+18.5% year over year; +12.5% a year from FY2020 to FY2025) with a 1.6% net margin.
Financial health check
| Revenue growth a year (FY2020–FY2025) | +12.5% good |
|---|---|
| Operating margin | 1.9% weak |
| Free cash flow margin | -10.2% weak |
| Return on equity (FY2025) | 1.1% weak |
| Return on assets (FY2025) | 0.9% weak |
| Net cash (cash minus debt) | $1.44B good |
| Fiscal year | Revenue | Net income | Free cash flow |
|---|---|---|---|
| FY2020 | $747.7M | $79.6M | $8.8M |
| FY2021 | $811.5M | $-2.0M | $-11.2M |
| FY2022 | $898.3M | $-36.9M | $-71.1M |
| FY2023 | $1.04B | $-8.9M | $12.8M |
| FY2024 | $1.14B | $16.3M | $-8.5M |
| FY2025 | $1.35B | $22.0M | $-137.4M |
Valuation snapshot
| Market value | $7.73B |
|---|---|
| P/E ratio | 316.7 |
| Dividend yield | None |
Rank among 1514 US companies
Market value at each year end
Kratos Defense & Security Solutions’s market value went from $447.8M at the end of 2016 to $7.73B on Oct 28, 2026, about 17.3 times as much; since the end of 2025 it is down 40%.
Show as a table
| Year end | Market value | Change |
|---|---|---|
| Oct 28, 2026 | $7.73B | -39.7% |
| 2025 | $12.82B | +221.6% |
| 2024 | $3.99B | +52.3% |
| 2023 | $2.62B | +101.3% |
| 2022 | $1.30B | -46.0% |
| 2021 | $2.41B | -28.6% |
| 2020 | $3.37B | +75.9% |
| 2019 | $1.91B | +30.9% |
| 2018 | $1.46B | +33.6% |
| 2017 | $1.09B | +144.3% |
| 2016 | $447.8M |
Price behavior
| YTD | 1 yr | 3 yr | 5 yr | 10 yr | |
|---|---|---|---|---|---|
| KTOS price data to Oct 28, 2026 | -45.8% | -54.1% | +34.4% | +13.7% | +21.9% |
Show as a table
| Year | Price data |
|---|---|
| 2026 (to date) | -45.8% |
| 2025 | +187.8% |
| 2024 | +30.0% |
| 2023 | +96.6% |
| 2022 | -46.8% |
| 2021 | -29.3% |
| 2020 | +52.3% |
| 2019 | +27.8% |
| 2018 | +33.0% |
| 2017 | +43.1% |
| 2016 | +80.5% |
| 2015 | -18.3% |
| 2014 | -34.6% |
| 2013 | +52.7% |
| 2012 | -15.8% |
| 2011 | -54.7% |
| 2010 | +24.8% |
| 2009 | -24.6% |
| 2008 | -40.4% |
| 2007 | -17.5% |
| 2006 | -44.1% |
| 2008 financial crisis stocks fell Oct 9, 2007 – Mar 9, 2009 | Lost 78.1% over that stretch · deepest drop along the way 80.6%, back to its old high 142.2 months after the low |
|---|---|
| 2020 COVID crash stocks fell Feb 19, 2020 – Mar 23, 2020 | Lost 49.3% over that stretch · deepest drop along the way 51.1%, back to its old high 5.9 months after the low |
| 2022 bear market stocks fell Jan 3, 2022 – Oct 12, 2022 | Lost 52.6% over that stretch · deepest drop along the way 57.4%, back to its old high 21.1 months after the low |
Insider activity
Form 4 filings from 2025-10-29 to 2026-10-29 (25 read): 0 open-market purchases and 64 sales ($28.9M), 61 of them under pre-arranged 10b5-1 trading plans.
| Date | Insider | Type | Value |
|---|---|---|---|
| Aug 14, 2026 | Eric M Demarco President & CEO, Director | sell (plan) | $17.1M |
| Jun 8, 2026 | Steven S. Fendley President, US Division | sell | $1.9M |
| Aug 17, 2026 | Phillip D Carrai President, STC Division | sell (plan) | $1.3M |
| Aug 14, 2026 | Eric M Demarco President & CEO, Director | sell (plan) | $1.2M |
| Aug 18, 2026 | Scot B Jarvis Director | sell | $635K |
Who owns it
Large shareholders (13G filings)
| BlackRock, Inc. | 10.1% | Jun 30, 2026 |
| Vanguard Capital Management | 5.14% | Mar 31, 2026 |
| STATE STREET CORPORATION | 4.9% | Dec 31, 2025 |
ETFs with the most weight in KTOS
| ARKQ ARK Autonomous Technology & Robotics ETF | 11.09% |
| ARKX ARK Space Exploration & Innovation ETF | 10.03% |
| XAR SPDR S&P Aerospace & Defense ETF | 4.17% |
| GK AdvisorShares Gerber Kawasaki ETF | 2.81% |
| BOUT Innovator IBD Breakout Opportunities ETF | 2.47% |
| PSCI Invesco S&P SmallCap Industrials ETF | 2.23% |
| IQM Franklin Intelligent Machines ETF | 2.22% |
| FITE SPDR S&P Kensho Future Security ETF | 2.11% |
What could go wrong
- Spending big before contracts are won. Kratos funds Valkyrie drones and new factories ahead of contract awards. Cash flow after capital spending was negative $137.4 million in fiscal 2025. If orders fall short, the spending may not pay off.
- Drones may not become funded programs. Kratos's growth plans rely on its drones becoming "programs of record," meaning formal, budgeted government purchases. If that doesn't happen, or demand for unmanned aircraft and ground vehicles grows slowly, it may miss its targets.
- Fixed-price contracts squeeze thin margins. On fixed-price contracts, Kratos absorbs cost overruns. Rising labor and material costs have already hurt margins. In fiscal 2025, it kept just 1.9 cents of operating profit per dollar of sales.
- Reliance on U.S. government budgets. The U.S. government provides a significant share of revenue. Shutdowns, stopgap budgets and funding cuts can delay, shrink or cancel programs. The government shut down twice between October 2025 and February 2026.
- Shortage of skilled, security-cleared workers. An industry-wide shortage of science, engineering and production staff, especially people able to get security clearances, has pushed up labor costs. Kratos said this was hurting its business and its margins.
- Backlog may not turn into revenue. Kratos reported record backlog, meaning work under contract not yet delivered. But government contracts can be canceled or delayed without penalty, so the full amounts may never become revenue.
Recent events
- Quarterly results released
- Shareholder vote results
- Quarterly results released
- Executive or board change
- Acquisition or sale of assets completed
- Major agreement signed; Other company announcement
- Quarterly results released
- Major agreement signed; Other company announcement
- Quarterly results released
For income and retirement investors
Kratos pays no dividend and did not buy back any of its own shares from fiscal 2021 through fiscal 2025, so it offers no regular income. Anyone relying on it for retirement cash would have to sell shares. The share count has grown instead, rising 51% between October 29, 2021 and July 31, 2026, to about 187.7 million, which spreads each owner's claim on future profits thinner.
The stock has fallen hard in past downturns. It dropped about 81% from October 2007 to March 2009 and did not regain its 2007 peak until January 2021. It fell 51% in the 2020 COVID crash, recovering by September 2020, and 57% between April and October 2022, recovering in July 2024. As of October 28, 2026, the shares were down 54% over one year, after a 188% gain in 2025. Single stocks carry more risk than diversified funds.
Questions investors ask
How does Kratos Defense make money?
By selling drones, engines, electronics, satellite software and related services to defense and national security customers, with the U.S. government providing a significant share of revenue. In the fiscal year ended December 28, 2025, products made up 65% of its $1.35 billion revenue and services 35%. The Kratos Government Solutions segment brought in 78% and Unmanned Systems, which builds drones and their control systems, 22%. The United States accounted for 79% of revenue.
Does Kratos pay a dividend?
No. Kratos pays no dividend, and it did not buy back any of its own shares from fiscal 2021 through fiscal 2025. The company has been investing heavily in new factories and products, from hypersonic systems to jet engines and drones. Shareholders earn a return only if the share price rises. Retirees needing steady income would get cash from it only by selling shares, which hurts after a sharp fall like the 54% one-year decline as of October 28, 2026.
Is Kratos profitable?
Only slightly. In fiscal 2025, Kratos earned $22.0 million on $1.35 billion of revenue, a net margin of 1.6%, or 13 cents per diluted share. It posted net losses in fiscal 2021, 2022 and 2023. Free cash flow, the cash left after paying for equipment and buildings, was negative $137.4 million in fiscal 2025 as it invested heavily. As of October 28, 2026, the share price was about 317 times fiscal 2025 earnings per share, so the price reflects expectations of much higher future profits.
How volatile is Kratos stock?
Very. As of October 28, 2026, the shares were down 54% over one year and 46% since the start of 2026, after rising 188% in 2025. Their largest peak-to-trough fall in the 12 months to that date was 71%. Its one-year beta, a measure of how much a stock swings relative to the overall market, was 2.18, meaning it tended to move about twice as much as the market. Over the 10 years to that date, it returned about 22% a year, but it once fell 96% from a peak.
Which ETFs hold Kratos stock?
Many ETFs hold Kratos. Those giving it some of the largest weights include ARK Autonomous Technology & Robotics ETF (ARKQ), ARK Space Exploration & Innovation ETF (ARKX), SPDR S&P Aerospace & Defense ETF (XAR) and AdvisorShares Gerber Kawasaki ETF (GK). It also appears in Invesco S&P SmallCap Industrials ETF (PSCI) and SPDR S&P Kensho Future Security ETF (FITE). A fund spreads money across other companies too, so a fall in Kratos alone hurts less than owning the shares directly. Weights change over time.