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Why Is Kratos (KTOS) Down 2.7% Since Last Earnings Report?
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A month has gone by since the last earnings report for Kratos (KTOS - Free Report) . Shares have lost about 2.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Kratos due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Kratos Defense reported first-quarter 2023 adjusted earnings of 6 cents per share, up 50% from the 4 cents reported in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate of 3 cents by 100%.
The company reported a GAAP loss of 5 cents per share compared with a loss of 12 cents in the first quarter of 2022.
Total Revenues
Total revenues were $231.8 million, which surpassed the Zacks Consensus Estimate of $224 million by 3.6%. Total revenues also increased 18.1% from $196.2 million in the year-ago quarter.
Operational Update
Kratos Defense’s SG&A expenses were up 11.2%, and research and development expenses surged 10.9% year over year. Depreciation expenses and expenses related to the amortization of intangible assets decreased 7.7% and 5.9%, respectively.
KTOS reported a first-quarter 2023 operating income of $0.5 million against the operating loss of $1.2 million in the year-ago quarter.
Kratos Defense’s consolidated book-to-bill ratio for the first quarter of 2023 was in the band of 1.1-1.0, with bookings of $1.1 billion for the first quarter of 2023.
Kratos Defense’s total backlog at the end of the first quarter of 2023 was $1.13 billion compared with $1.11 billion at the end of the fourth quarter of 2022.
Segmental Performance
Unmanned Systems: Net revenues in the first quarter declined 8.7% year over year to $48 million.
Government Solutions: Net revenues in the first quarter increased 27.9% year over year to $183.8 million.
Financial Details
As of Mar 26, 2023, cash and cash equivalents were $46.7 million compared with $81.3 million as of Dec 25, 2022. The long-term debt totaled $250.3 million as of Mar 26, 2023, in line with the debt level as of Dec 25, 2022.
During the three months ended Mar 26, 2023, the cash outflow from operating activities was $25.7 million compared with the cash outflow of $7.9 million in the previous year.
Guidance
For the second quarter of 2023, KTOS expects to generate revenues in the $230-$240 million range. The Zacks Consensus Estimate for second-quarter revenues is pegged at $235.1 million, in line with the company’s projected range.
For 2023, Kratos Defense currently expects revenues in the $980-1,000 million range. The Zacks Consensus Estimate for full-year revenues stands at $989.7 million, slightly lower than the midpoint 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 revision.
The consensus estimate has shifted -60% due to these changes.
VGM Scores
Currently, Kratos has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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 these revisions indicates a downward shift. Notably, Kratos has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is Kratos (KTOS) Down 2.7% Since Last Earnings Report?
A month has gone by since the last earnings report for Kratos (KTOS - Free Report) . Shares have lost about 2.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Kratos due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Kratos Defense Q1 Earnings Beat, Revenues Rise Y/Y
Kratos Defense reported first-quarter 2023 adjusted earnings of 6 cents per share, up 50% from the 4 cents reported in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate of 3 cents by 100%.
The company reported a GAAP loss of 5 cents per share compared with a loss of 12 cents in the first quarter of 2022.
Total Revenues
Total revenues were $231.8 million, which surpassed the Zacks Consensus Estimate of $224 million by 3.6%. Total revenues also increased 18.1% from $196.2 million in the year-ago quarter.
Operational Update
Kratos Defense’s SG&A expenses were up 11.2%, and research and development expenses surged 10.9% year over year. Depreciation expenses and expenses related to the amortization of intangible assets decreased 7.7% and 5.9%, respectively.
KTOS reported a first-quarter 2023 operating income of $0.5 million against the operating loss of $1.2 million in the year-ago quarter.
Kratos Defense’s consolidated book-to-bill ratio for the first quarter of 2023 was in the band of 1.1-1.0, with bookings of $1.1 billion for the first quarter of 2023.
Kratos Defense’s total backlog at the end of the first quarter of 2023 was $1.13 billion compared with $1.11 billion at the end of the fourth quarter of 2022.
Segmental Performance
Unmanned Systems: Net revenues in the first quarter declined 8.7% year over year to $48 million.
Government Solutions: Net revenues in the first quarter increased 27.9% year over year to $183.8 million.
Financial Details
As of Mar 26, 2023, cash and cash equivalents were $46.7 million compared with $81.3 million as of Dec 25, 2022. The long-term debt totaled $250.3 million as of Mar 26, 2023, in line with the debt level as of Dec 25, 2022.
During the three months ended Mar 26, 2023, the cash outflow from operating activities was $25.7 million compared with the cash outflow of $7.9 million in the previous year.
Guidance
For the second quarter of 2023, KTOS expects to generate revenues in the $230-$240 million range. The Zacks Consensus Estimate for second-quarter revenues is pegged at $235.1 million, in line with the company’s projected range.
For 2023, Kratos Defense currently expects revenues in the $980-1,000 million range. The Zacks Consensus Estimate for full-year revenues stands at $989.7 million, slightly lower than the midpoint 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 revision.
The consensus estimate has shifted -60% due to these changes.
VGM Scores
Currently, Kratos has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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 these revisions indicates a downward shift. Notably, Kratos has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.