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Why Is Kratos (KTOS) Up 31.7% Since Last Earnings Report?
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It has been about a month since the last earnings report for Kratos (KTOS - Free Report) . Shares have added about 31.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Kratos due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Kratos Defense Q4 Earnings Top Estimates, Revenues Rise
Kratos Defense reported fourth-quarter 2021 adjusted earnings of 11 cents per share, which beat the Zacks Consensus Estimate by 22.2%. The bottom line also improved 37.5% from 8 cents per share reported in the prior-year quarter.
Kratos Defense reported a GAAP loss of 2 cents per share against earnings of 62 cents reported in the prior-year quarter.
The company reported earnings per share (EPS) of 36 cents for full-year 2021, which increased 9.1% from 33 cents reported in 2020.
Total Revenues
Total revenues were $211.6 million, which beat the Zacks Consensus Estimate of $209 million by 1.4%. Total revenues increased 2.5% from $206.4 million in the year-ago quarter. The increase was primarily due to higher revenues generated from the Unmanned Systems, Space, Satellite and Cyber, Microwave Products and Turbine Technologies businesses.
In 2021, KTOS generated revenues worth $811.5 million, up 8.5% from the year-ago figure of $747.7 million.
Operational Update
Kratos Defense’s operating expenses were $52.3 million in the reported quarter compared with $45.3 million in the prior-year quarter. SG&A expenses were up 13.6%, while research and development expenses increased 18.4% year over year. Meanwhile, depreciation expenses rose 85.7%, whereas expenses regarding acquisitions and restructuring-related items increased a solid 150%.
The company reported fourth-quarter 2021 operating income of $9.2 million, which increased 2.2% from the year-ago quarter.
The company’s book-to-bill ratio for the fourth quarter of 2021 was 1.5 to 1.0, with bookings of $840 million for the same period.
The total backlog for Kratos Defense at the end of the fourth quarter of 2021 was $953.9 million, up from $839.1 million at the end of the third quarter of 2021 and $922.2 million at the end of the fourth quarter of 2020.
Segmental Performance
Unmanned Systems: Net revenues during the fourth quarter increased 9.9% year over year to $54.4 million.
Government Solutions: Net revenues in the fourth quarter increased 0.2% year over year to $157.2 million, reflecting organic growth in the company’s Space, Satellite and Cyber, Microwave Products and Turbine Technologies businesses.
Financial Details
As of Dec 26, 2021, cash and cash equivalents were $349.4 million compared with $380.8 million as of Dec 27, 2020.
Long-term debt, including net of the current portion, totaled $296.7 million as of Dec 26, 2021, slightly down from $301 million as of Dec 27, 2020.
In 2021, cash generated from operating activities was $35.3 million compared with $44.7 million in the prior year.
Guidance
For the first quarter of 2022, KTOS expects to generate revenues in the range of $190-$200 million. The Zacks Consensus Estimate for first-quarter revenues is pegged at $190 million, which meets the lower end of the company’s projected range.
For 2022, the company expects revenues in the range of $880-$920 million. The Zacks Consensus Estimate for full-year revenues stands at $881.3 million, which lies near the lower end of the company’s projected range.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -300% due to these changes.
VGM Scores
At this time, Kratos has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Kratos has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Kratos (KTOS) Up 31.7% Since Last Earnings Report?
It has been about a month since the last earnings report for Kratos (KTOS - Free Report) . Shares have added about 31.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Kratos due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Kratos Defense Q4 Earnings Top Estimates, Revenues Rise
Kratos Defense reported fourth-quarter 2021 adjusted earnings of 11 cents per share, which beat the Zacks Consensus Estimate by 22.2%. The bottom line also improved 37.5% from 8 cents per share reported in the prior-year quarter.
Kratos Defense reported a GAAP loss of 2 cents per share against earnings of 62 cents reported in the prior-year quarter.
The company reported earnings per share (EPS) of 36 cents for full-year 2021, which increased 9.1% from 33 cents reported in 2020.
Total Revenues
Total revenues were $211.6 million, which beat the Zacks Consensus Estimate of $209 million by 1.4%. Total revenues increased 2.5% from $206.4 million in the year-ago quarter. The increase was primarily due to higher revenues generated from the Unmanned Systems, Space, Satellite and Cyber, Microwave Products and Turbine Technologies businesses.
In 2021, KTOS generated revenues worth $811.5 million, up 8.5% from the year-ago figure of $747.7 million.
Operational Update
Kratos Defense’s operating expenses were $52.3 million in the reported quarter compared with $45.3 million in the prior-year quarter. SG&A expenses were up 13.6%, while research and development expenses increased 18.4% year over year. Meanwhile, depreciation expenses rose 85.7%, whereas expenses regarding acquisitions and restructuring-related items increased a solid 150%.
The company reported fourth-quarter 2021 operating income of $9.2 million, which increased 2.2% from the year-ago quarter.
The company’s book-to-bill ratio for the fourth quarter of 2021 was 1.5 to 1.0, with bookings of $840 million for the same period.
The total backlog for Kratos Defense at the end of the fourth quarter of 2021 was $953.9 million, up from $839.1 million at the end of the third quarter of 2021 and $922.2 million at the end of the fourth quarter of 2020.
Segmental Performance
Unmanned Systems: Net revenues during the fourth quarter increased 9.9% year over year to $54.4 million.
Government Solutions: Net revenues in the fourth quarter increased 0.2% year over year to $157.2 million, reflecting organic growth in the company’s Space, Satellite and Cyber, Microwave Products and Turbine Technologies businesses.
Financial Details
As of Dec 26, 2021, cash and cash equivalents were $349.4 million compared with $380.8 million as of Dec 27, 2020.
Long-term debt, including net of the current portion, totaled $296.7 million as of Dec 26, 2021, slightly down from $301 million as of Dec 27, 2020.
In 2021, cash generated from operating activities was $35.3 million compared with $44.7 million in the prior year.
Guidance
For the first quarter of 2022, KTOS expects to generate revenues in the range of $190-$200 million. The Zacks Consensus Estimate for first-quarter revenues is pegged at $190 million, which meets the lower end of the company’s projected range.
For 2022, the company expects revenues in the range of $880-$920 million. The Zacks Consensus Estimate for full-year revenues stands at $881.3 million, which lies near the lower end of the company’s projected range.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -300% due to these changes.
VGM Scores
At this time, Kratos has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Kratos has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.