Why Kratos Stock Keeps Going Down
Key Points
Kratos stock dropped for a fourth-straight day on Monday.
The company produces popular military hardware, but isn't making a lot of money off of it.
- 10 stocks we like better than Kratos Defense & Security Solutions ›
Kratos Defense & Security (NASDAQ: KTOS) stock tumbled 6.3% through 12:30 p.m. ET Monday, its fourth straight day of losses on no obvious bad news. If you ask me, there's only one logical explanation for that:
Kratos stock costs too much.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
Image source: Kratos Defense.
What Kratos does
Kratos is one of the best-known producers of military drones right now, a red-hot segment of the defense market. Its marquee products include drones used for target practice, and the XQ-58 Valkyrie Collaborative Combat Aircraft (also known as a "loyal wingman" drone). Both the U.S. Air Force and U.S. Marine Corps are known to have purchased at least a few of the latter for testing, and Kratos is currently partnering with Northrop Grumman (NYSE: NOC) to take the Valkyrie program to the next level.
The company also produces ground systems for satellites and space vehicles, propulsion systems for drones, missiles, loitering munitions, and is actively involved in research and development into hypersonic vehicles and rocket systems.
How much Kratos costs
Space, hypersonics, and drones? Kratos certainly knows how to be in the right place(s) at the right time to meet Pentagon demand for high-technology military hardware. The problem with Kratos stock is that... this fact is pretty well known at this point, and that knowledge has driven Kratos stock to nosebleed levels.
Kratos shares currently trade at nearly 800 times trailing earnings and more than 200 times what the company is expected to earn over the next 12 months. Worse, the "quality" of these earnings is questionable, as they're not supported by positive free cash flow, causing the company to continue burning cash.
No matter how good a company Kratos might be, at its current share price, Kratos stock is a sell for me.
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 $450,256!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,171,666!*
Now, it’s worth noting Stock Advisor’s total average return is 942% — a market-crushing outperformance compared to 196% 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 February 2, 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
