Kratos Defense & Security Solutions Inc (NASDAQ:KTOS), a capital goods company based in United States, received a lot of attention from a substantial price movement on the NasdaqGS in the over the last few months, increasing to $13.81 at one point, and dropping to the lows of $11.01. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether KTOS's current trading price of $11.55 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at KTOS’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. See our latest analysis for KTOS
Is KTOS still cheap?
Good news, investors! KTOS is still a bargain right now. I’ve used the price-to-book ratio in this instance because there’s not enough visibility to forecast its cash flows, and its earnings doesn’t seem to reflect its true value. The stock’s ratio of 2.9x is currently well-below the industry average of 16.3x, meaning that it is trading at a cheaper price relative to its peers. Although, there may be another chance to buy again in the future. This is because KTOS’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, KTOS’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What kind of growth will KTOS generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares.Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at KTOS future expectations. With revenues expected to grow by a double-digit 14.21% over the next couple of years, the outlook is positive for KTOS. If the level of expenses is able to be maintained, it looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? Since KTOS is currently undervalued, it may be a great time to increase your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on KTOS for a while, now might be the time to enter the stock. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy KTOS. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed investment decision.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Kratos Defense & Security Solutions. You can find everything you need to know about KTOS in the latest infographic research report. If you are no longer interested in Kratos Defense & Security Solutions, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.