Aerospace & Defense · NASDAQ
Current Price
$59.56
Intrinsic Value
Use the calculator below to estimate
Run a full DCF analysis on Kratos Defense & Security Solutions, Inc. with auto-filled fundamentals, adjustable assumptions, and sensitivity heatmap.
Kratos Defense & Security Solutions, Inc. operates as a government contractor of the U.S. Department of Defense. The company operates through two segments, Kratos Government Solutions and Unmanned Systems. The Kratos Government Solutions segment offers microwave electronic products, space and satellite communications, training and cybersecurity/ warfare, C5ISR/ modular systems, turbine technologies, and defense and rocket support services. The Unmanned Systems segment provides unmanned aerial systems, and unmanned ground and seaborne systems. It serves national security related agencies, the department of defense, intelligence agencies, and classified agencies, as well as international government agencies and domestic and international commercial customers. Kratos Defense & Security Solutions, Inc. was incorporated in 1994 and is headquartered in San Diego, California.
ROIC (TTM)
0.8%
ROE (TTM)
1.2%
FCF Yield
-1.23%
The intrinsic value of KTOS depends on assumptions about future growth rate, discount rate (WACC), and terminal value. A DCF model discounts projected free cash flows back to present value — small changes in WACC can shift the estimate by 20% or more, which is why sensitivity analysis is essential.
Whether KTOS is undervalued depends on comparing the DCF-derived intrinsic value to the current market price of $59.56. A positive margin of safety (intrinsic value above market price) suggests potential undervaluation, but the degree of confidence depends on the reliability of your growth and discount rate assumptions.
To perform a DCF valuation on Kratos Defense & Security Solutions, Inc.: (1) Start with the trailing free cash flow per share as the base, (2) project future FCF growth over 5-10 years based on Aerospace & Defense industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting KTOS's risk profile, and (4) add a terminal value for cash flows beyond the projection period.
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Kratos Defense & Security Solutions, Inc., this means projecting how much free cash flow the Aerospace & Defense will produce over the next 5-10 years, then discounting those amounts to today's dollars. KTOS's ROIC of 0.8% suggests the company may face challenges generating returns above its cost of capital.
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For KTOS, the capital structure and equity risk premium determine WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%.
