NEW YORK, June 30, 2026, 12:08 (EDT)
- Kratos gained 4.6% late in the morning, though shares traded below the open and far from the session high.
- A less obvious number: Unmanned Systems made up 22% of Kratos’ Q1 revenue and 19% of its backlog.
- The stock is down roughly 42% from the $84 price set in the February equity deal, so focus now is on how they manage cash and convert backlog.
- AeroVironment earnings boosted drone stocks. Kratos, though, offered guidance that signals growth for missiles, engines, space and electronics.
Kratos Defense & Security Solutions, Inc. NASDAQ:KTOS gained 4.6% Tuesday, joining a wider drone-stock rally after AeroVironment, Inc. NASDAQ:AVAV. But trading was choppy. Shares changed hands at $49.13 on the last quote, under the $50.00 open and over $2 off the session high at $51.45.
Kratos showed up on Barron’s premarket list of stocks up at least 7% as AeroVironment led gains among defense names. By late morning, Kratos was still up, outpacing the SPDR S&P Aerospace & Defense ETF (NYSEARCA:XAR). But it trailed AeroVironment, which saw a bigger jump on earnings news.
| Name | Google Finance ticker | Latest price | Day move | Market read |
|---|---|---|---|---|
| Kratos Defense & Security Solutions | NASDAQ:KTOS | $49.13 | +4.6% | Shares rose, then gave back gains |
| AeroVironment | NASDAQ:AVAV | $160.51 | +15.5% | Drone rally follows results |
| Red Cat Holdings | NASDAQ:RCAT | $10.39 | +0.7% | Lower-profile drone name |
| L3Harris Technologies | NYSE:LHX | $288.45 | -0.3% | Bigger defense contractor |
| SPDR S&P Aerospace & Defense ETF | NYSEARCA:XAR | $281.05 | +1.5% | Sector barometer |
| SPDR S&P 500 ETF | NYSEARCA:SPY | $745.48 | +0.6% | Main index tracker |
Kratos is not just a drone play. The company’s Unmanned Systems business brought in $82.6 million last quarter, which was 22.3% of total revenue. Government Solutions did $288.4 million. Backlog is even more skewed: Unmanned Systems backlog came in at $375.4 million, or 18.7% of total, while Government Solutions backlog stood at $1.635 billion.
| Kratos metric | Latest disclosed figure | Share / read-through |
|---|---|---|
| Q1 revenue | $371.0 million | Forms FY26 ramp starting point |
| Unmanned Systems Q1 revenue | $82.6 million | 22.3% of total Q1 |
| Government Solutions Q1 revenue | $288.4 million | 77.7% of total Q1 |
| Total backlog | $2.010 billion | 1.16x midpoint of FY26 guide |
| Funded backlog | $1.457 billion | 72.5% of total |
| Unmanned Systems backlog | $375.4 million | 18.7% of backlog |
| Government Solutions backlog | $1.635 billion | 81.3% of backlog |
This is important as traders lump the stock in with drone plays, even though Kratos’s own numbers flag a broader business across hypersonics, rocket tech, propulsion, satellite ground stuff and microwave electronics. Kratos set 2026 revenue guidance at $1.70 billion to $1.76 billion and adjusted EBITDA at $170 million to $176 million. Free cash flow use is guided between $85 million and $105 million.
| 2026 Kratos guidance | Company range | Midpoint as % of revenue midpoint |
|---|---|---|
| Revenue | $1.70 bln-$1.76 bln | — |
| Adjusted EBITDA | $170 mln-$176 mln | 10.0% |
| Capex | $155 mln-$165 mln | 9.2% |
| Free cash flow (use) | $(85) mln-$(105) mln | -5.5% |
| Total investments (forecast) | $248 mln-$270 mln | 15.0% |
Kratos CEO Eric DeMarco said in May that “the Department’s demand signals are real” and the company is spending to add capability and ramp up manufacturing. Kratos also said in the same release it plans to build about 40 Valkyrie jets a year by late 2027. GlobeNewswire
This isn’t a minor detail. Kratos sold 14.3 million shares at $84 back in February, expecting to pull in about $1.17 billion. By late morning Tuesday, the shares traded about 42% lower than that price. At the time, Kratos said it would use the deal’s proceeds for scaling up, funding new development, shoring up its balance sheet, and investing in Nomad, Orbit and maybe other deals.
That spending includes the engine ramp. Kratos said June 9 it plans to boost Spartan turbojet engine output to 3,000 units next year. Steve Fendley, who heads Kratos Unmanned Systems, said demand for “scalable, high-performance but low-cost propulsion systems” has gone up as missile stocks are built back up. GlobeNewswire
AeroVironment delivered the jolt in the last 24 hours. The company posted fiscal Q4 revenue of $641.6 million, a jump of 133%. Full-year sales reached $1.98 billion. Funded backlog came in at $1.2 billion. CEO Wahid Nawabi said there’s more demand now for both lethal and non-lethal drones, as well as counter-UAS, space and advanced tech.
By sales multiples, Kratos trades above current revenue. The company’s market cap was $8.81 billion at last check, while AeroVironment’s sat at $7.99 billion. That’s about 5.1 times the midpoint of Kratos’s 2026 revenue outlook, compared to AeroVironment at around 4.0 times its fiscal 2026 revenue. The timeframes are a bit different, but the spread suggests investors are pricing Kratos for future business, not just the sales on the books now.
Sell-side calls stay upbeat. Benzinga lists a Buy consensus and an average price target of $90.76 for Kratos. JPMorgan’s most recent rating, posted June 12, set a target of $82. That’s still a big premium to Tuesday’s close, but Kratos trades at about 289 times trailing earnings, so there’s not much cushion for any slip in contracts, output, or cash flow.
Kratos is set to report earnings on July 30, according to Investing.com. The site’s Q2 revenue estimate stands at $410.61 million.
