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Kratos Defense & Security Solutions
Industrials · Aerospace & Defense
Structural: pure-play exposure to two Pentagon priority programs - attritable unmanned combat air (CCA / Replicator) via Valkyrie XQ-58 and software-defined satellite ground for proliferated LEO via OpenSpace / Quantum. Sole listed name with both legs; primes like $LMT / $NOC / $RTX dilute the read-through, $LDOS / $LHX are services-heavy.
- Valkyrie is the closest flying CCA reference design; selection on any follow-on Increment 2 contract re-rates the unmanned segment
- OpenSpace replaces legacy hardware modems for $SATS / $VSAT / mega-LEO operators; recurring software revenue mix climbing
- Hypersonic and tactical-missile target-drone work compounds quietly - Kratos is the de-facto sole-source on USAF / USN target programs
- Microwave Electronics (KGS) supplies subsystems into nearly every US missile + radar prime, hidden picks-and-shovels leg
- Backlog and bookings have inflected post-Ukraine; FY guide raised twice trailing
- Operating margins remain mid-single-digit; defense-cost-plus mix caps near-term leverage
- Valkyrie revenue is still lumpy program-by-program; loss on a major CCA award compresses the multiple fast
- Trades at premium EV/sales vs $LMT $NOC $RTX on unproven unmanned-margin profile
- Equity raises have been a recurring funding tool - dilution risk on any large-program acceleration
- Commercial-space leg is exposed to $VSAT / $SATS capex cycles, not pure DoD
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