Why Kratos Defense Stock Dropped Today
Key Points
Bad earnings news from Red Cat may be weighing on Kratos stock today.
Kratos is like Red Cat in a lot of ways, but not in the most important way -- profitability.
- 10 stocks we like better than Kratos Defense & Security Solutions ›
Kratos Defense & Security (NASDAQ: KTOS) stock slid 5% through 11:35 a.m. ET Thursday, not on any news from Kratos, but perhaps in reaction to an earnings report from Red Cat Holdings (NASDAQ: RCAT) last night.
Analysts forecast Red Cat to lose money in Q4, but not quite as much as it ultimately lost ($0.17 per share, versus $0.14 forecast).
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
Image source: Getty Images.
Red Cat Q4 earnings
Red Cat enjoyed tremendous sales growth -- nearly 2,000% for the quarter and 160% for the year. The company reported gross profits but net losses for both periods.
What does this have to do with Kratos, though? A couple things:
Like Red Cat, Kratos is in the business of manufacturing drones for the military. Like Red Cat, Kratos has experienced phenomenal sales growth, averaging 12.5% annually over the last five years, according to data from S&P Global Market Intelligence, 14.5% over the last three years, 18.5% last year, and 21.9% last quarter. (So sales growth is accelerating). Like Red Cat, Kratos continues to burn cash, and indeed, at $137 million over the last year, it is burning even more cash than Red Cat.
Unlike Red Cat, Kratos is already profitable, earning $22 million over the last 12 months.
What it means for Kratos stock
All of which is to say that despite being an older company, Kratos looks a lot like Red Cat. Recent bad earnings news from Red Cat may therefore influence investors' opinion of Kratos stock as well.
The good news for Kratos shareholders, though, is that it's a lot farther along its growth path than Red Cat is. Kratos is profitable today and is expected to double its 2025 profits this year, then nearly double them again next year.
Red Cat isn't expected to be profitable... ever.
Should you buy stock in Kratos Defense & Security Solutions right now?
Before you buy stock in Kratos Defense & Security Solutions, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Kratos Defense & Security Solutions wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $510,710!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,105,949!*
Now, it’s worth noting Stock Advisor’s total average return is 929% — a market-crushing outperformance compared to 186% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of March 19, 2026.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Kratos Defense & Security Solutions. The Motley Fool has a disclosure policy.
Recommended Articles
