Kratos Defense & Security Solutions, Inc. (KTOS) Intrinsic Value & DCF Valuation
Aerospace & Defense · NASDAQ
Current Price
$41.82
Intrinsic Value
Use the calculator below to estimate
COMPETITIVE MOAT
↑Proprietary Technology & IP
Kratos develops specialized technologies in areas like hypersonics and high-energy lasers. This intellectual property creates barriers to entry for competitors.
↑Government Contract Expertise
Deep experience navigating complex government procurement processes and established relationships provide a significant advantage. Winning and executing these contracts builds trust and future opportunities.
↑Scalable Manufacturing for Affordability
Kratos' investment in expanding manufacturing for propulsion and unmanned systems enables cost-effective production. This focus on affordability is a key differentiator in defense spending.
INVESTMENT RISKS
↓Dependence on Key Government Programs
Kratos' revenue is heavily reliant on securing and maintaining contracts with government entities. A cancellation or significant reduction in a major program could severely impact financial performance.
↓Competition from Larger Defense Contractors
While Kratos focuses on affordability, larger, well-established defense companies possess greater resources and broader capabilities. They can leverage scale and existing relationships to compete for contracts.
↓Supply Chain Vulnerabilities
The defense industry relies on complex global supply chains. Disruptions due to geopolitical events, material shortages, or supplier issues could impact Kratos' production and delivery schedules.
Customize the KTOS valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for Kratos Defense & Security Solutions, Inc. respond.
Open DCF Calculator for KTOSCompany Overview
Kratos Defense & Security Solutions, Inc. primarily functions as a contractor for the United States Department of Defense. Its business operations are organized into two distinct divisions: Kratos Government Solutions and Unmanned Systems. The Kratos Government Solutions segment delivers a comprehensive suite of products and services, including advanced microwave electronics, solutions for space and satellite communications, specialized training and cybersecurity/warfare capabilities, C5ISR (Command, Control, Communications, Computers, Combat Systems, Intelligence, Surveillance, and Reconnaissance) and modular systems, cutting-edge turbine technologies, and essential defense and rocket support services. Meanwhile, the Unmanned Systems division is dedicated to developing and supplying autonomous platforms, specifically unmanned aerial, ground, and maritime systems. Kratos caters to an extensive client base, which includes various national security organizations, the DoD, intelligence and classified agencies, international government bodies, and both domestic and global commercial enterprises. The company was established in 1994 and its corporate headquarters are located in San Diego, California.
Financial Metrics — KTOS Stock Valuation Data
Revenue/Share (TTM)
$8.07
FCF/Share (TTM)
$-0.68
ROIC (TTM)
0.5%
ROE (TTM)
1.1%
P/FCF
n/m
EV/EBITDA
55.8x
FCF Yield
-1.64%
Debt/Equity
0.06x
KTOS currently has negative free cash flow, so cash-flow ratios such as P/FCF and FCF yield do not give a meaningful read on whether the stock is cheap or expensive. A DCF valuation is unreliable until cash generation turns positive — focus on the path to profitability instead.
Frequently Asked Questions
What is the intrinsic value of KTOS?
Kratos Defense & Security Solutions, Inc. currently generates $-0.68 in free cash flow per share. At the current price of $41.82, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is KTOS undervalued?
KTOS currently has negative free cash flow, so its P/FCF ratio is not meaningful and cannot tell you whether the stock is cheap or expensive. With cash flow negative, a DCF-based undervalued or overvalued judgment is unreliable — look at the path back to positive cash generation instead.
How do I value KTOS stock using DCF?
To perform a DCF valuation on Kratos Defense & Security Solutions, Inc.: (1) Start with the trailing free cash flow per share ($-0.68) 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 — with a debt-to-equity of 0.06x, capital structure is an important factor, and (4) add a terminal value for cash flows beyond the projection period.
What is DCF valuation and how does it apply to KTOS?
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 company will produce over the next 5-10 years, shaped by Aerospace & Defense trends, then discounting those amounts to today's dollars. KTOS's ROIC of 0.5% means the company's return on invested capital sits below the level that typically clears its cost of capital.
How does WACC affect KTOS stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For KTOS, with a debt-to-equity ratio of 0.06x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 55.8x, the market's implied discount rate can be reverse-engineered for comparison. In MiniValuator you set this discount rate yourself as a single editable number, 10% by default, instead of computing a formal WACC.
Learn More
- See KTOS PE Valuation → — Earnings-based stock valuation using PE ratio analysis
- DCF Methodology — Step-by-step guide to discounted cash flow analysis
- PE Methodology — Guide to PE ratio stock valuation
- WACC — Understanding the discount rate used in DCF
- Margin of Safety — How to evaluate downside protection
- Intrinsic Value — How to evaluate stock fair value
- How to Calculate Intrinsic Value — Complete guide for investors
Related Valuations
All Industrials valuationsDCF and P/E value KTOS with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2026-10-08. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.