Generally speaking, investors are inspired to be stock pickers by the potential to find the big winners. Mistakes are inevitable, but a single top stock pick can cover any losses, and so much more. Take, for example, the Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) share price, which skyrocketed 364% over three years. It's also up 26% in about a month. This could be related to the recent financial results that were recently released - you could check the most recent data by reading our company report.
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While Kratos Defense & Security Solutions made a small profit, in the last year, we think that the market is probably more focussed on the top line growth at the moment. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. It would be hard to believe in a more profitable future without growing revenues.
Kratos Defense & Security Solutions's revenue trended up 2.3% each year over three years. Considering the company is losing money, we think that rate of revenue growth is uninspiring. So we're surprised that the share price has soared by 67% each year over that time. A win is a win, even if the revenue growth doesn't really explain it, in our view). Shareholders would want to be sure that the share price rise is sustainable.
You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).
We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. This free report showing analyst forecasts should help you form a view on Kratos Defense & Security Solutions
A Different Perspective
It's good to see that Kratos Defense & Security Solutions has rewarded shareholders with a total shareholder return of 71% in the last twelve months. That gain is better than the annual TSR over five years, which is 21%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It is all well and good that insiders have been buying shares, but we suggest you check here to see what price insiders were buying at.
Kratos Defense & Security Solutions is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.