As reflected at the current price of $18, what future Kratos Defense & Security Soluti operating performance is the market anticipating? To achieve average annual stock market performance of 9.0% over the next 6 years, Kratos Defense & Security Soluti shares will need to reach $31. Upper quartile performance will require a $36 Kratos Defense & Security Soluti stock price by 2029.
Executive Summary
- Kratos Defense & Security Soluti important characteristics: high expected growth, high profitability, instability, and low financial strength. A big positive influence on Kratos Defense & Security Soluti valuation is its superior Profitability.
- Very high valuation, leading shareholder returns. Current valuation levels are very high relative to the Kratos Defense & Security Soluti Peer Group. Recent market returns have significantly outperformed the Kratos Defense & Security Soluti Peer Group. Total shareholder returns expected to significantly lag the overall equity market. Based on current investor expectations, Kratos Defense & Security Soluti shares should reach a level of $17 by 2029 — an -0.8% per year total shareholder return. A 2029 stock price of $31 would reflect median performance and a price of $36 would be required to reach upper quartile performance.
- Kratos Defense & Security Soluti past growth is modestly above average. Historical growth has been high relative to the Kratos Defense & Security Soluti Peer Group and forecasted growth is relatively very high. Equity Growth, and Revenue Growth have been superior. These factors have buoyed market perceptions of Kratos Defense & Security Soluti. Kratos Defense & Security Soluti historical income statement growth and balance sheet growth have diverged. Revenue growth has exceeded asset growth; earnings growth has fallen short of equity growth driving erosion in return on equity.
- Profitability is very high. The company has normal cash needs.
- Kratos Defense & Security Soluti risk profile is favorable. Overall variability has been very low with very low revenue variability, very high E.P.S. variability, and very low stock price volatility. Financial Strength is below average and earnings’ expectations are below average. The debt/capital ratio has declined very significantly.
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