Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at Kratos Defense & Security Solutions Inc’s (NASDAQ:KTOS) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. Check out our latest analysis for Kratos Defense & Security Solutions
How Well Did KTOS Perform?
I look at data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This technique allows me to analyze many different companies on a more comparable basis, using the latest information. For Kratos Defense & Security Solutions, the most recent bottom-line -$24.7M, which, relative to the prior year’s level, has become less negative. Since these figures may be somewhat myopic, I have calculated an annualized five-year value for Kratos Defense & Security Solutions’s net income, which stands at -$48.6M. This means that, even though net income is negative, it has become less negative over the years.
Additionally, we can analyze Kratos Defense & Security Solutions’s loss by looking at what’s going on in the industry on top of within the company. Initially, I want to briefly look into the line items. Revenue growth over past couple of years has been fairly soft, remaining flat on average at 0.04%. Given that top-line growth is also pretty flat, the key to profitability moving forward would be managing costs. Inspecting growth from a sector-level, the US aerospace and defense industry has been growing its average earnings by double-digit 12.85% in the prior year, and a less exciting 4.80% over the previous few years. This shows that, despite the fact that Kratos Defense & Security Solutions is currently loss-making, it may have gained from industry tailwinds, moving earnings towards to right direction.
What does this mean?
Though Kratos Defense & Security Solutions’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always difficult to envisage what will happen in the future and when. The most useful step is to examine company-specific issues Kratos Defense & Security Solutions may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research Kratos Defense & Security Solutions to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for KTOS’s future growth? Take a look at our free research report of analyst consensus for KTOS’s outlook.
2. Financial Health: Is KTOS’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
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.