Monday, February 03, 2014 10:23:00 AM
The present capitalisation is $ 410 Mio
Mark Jordan, an analyst at Noble Financial Capital Markets, values the shares 50% above current levels. His 12-month target of $10.50 a share is based on an enterprise value of nine times 2014 Ebitda (earnings before interest, taxes, depreciation and amortization) and assumes that the company pays down some debt.
Kratos' defense products are geared toward critical aspects of modern warfare, and include unmanned surveillance planes, ballistic missiles, rocket-testing systems, and satellite ground systems.
Kratos also provides security and surveillance systems for homeland safety, and to commercial customers, including Chevron, Calpine Power Plants and Mellon Bank.
The U.S. government is the company's largest customer, with about 65% of sales.
For 2013, Jordan expects the company to earn 17 cents a share, adjusting for acquisition related charges, on revenue of $964 million. This year, he sees earnings rising to 79 cents a share, reflecting lower interest and acquisition related expenses.
Despite the difficult environment, Kratos hasn't lost or had any contracts cancelled. In the September quarter, the backlog remained unchanged at $1.1 billion.
Kratos could see growth from its public safety and security division, as well as from international customers. Combined, these customers will account for roughly 35% of revenue, and their business is expected to grow 10%. Meanwhile, the company has guided for the U.S. federal government's business to decline by about 5%, with company-wide revenue expected to be flat for the year.
In November, Kratos postponed refinancing its $625 million in Senior Notes, which carry a hefty 10% interest rate. The notes, which aren't callable until May, became too expensive to buy back before the call date. The company will likely buy them back in May, which could reduce annual interest expense by $15 million.
Kratos has a leveraged balance sheet, with $590 million in net debt. That level looks manageable, though, given the company's ample free cash flow generation; $48 million is expected this year, and management appears committed to using the cash to pay down debt.
We've made the point before that with its product portfolio, Kratos could make an attractive acquisition target for a larger defense concern. Any deal would likely occur at a large premium.
Recent KTOS News
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 05/24/2024 12:34:21 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 05/24/2024 12:22:59 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 05/24/2024 12:10:31 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 05/23/2024 11:45:25 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 05/23/2024 11:27:27 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 05/23/2024 11:22:30 PM
- Team BlueHalo Demonstrates Integrated Backend Mission Services for Space Force’s SCAR Program • GlobeNewswire Inc. • 05/22/2024 12:00:00 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 05/17/2024 11:57:39 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 05/17/2024 11:48:17 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 05/15/2024 08:51:07 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 05/15/2024 08:48:57 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 05/10/2024 09:48:24 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 05/08/2024 09:11:30 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 05/07/2024 08:09:30 PM
- Kratos Reports First Quarter 2024 Financial Results • GlobeNewswire Inc. • 05/07/2024 08:00:00 PM
- Kratos Defense & Security Solutions Schedules First Quarter 2024 Earnings Conference Call for Tuesday, May 7th • GlobeNewswire Inc. • 04/29/2024 12:00:00 PM
- Kratos Demonstrates Fully Virtualized SATCOM Ground System for U.S. Army Futures Command Over SES’s O3b MEO Constellation • GlobeNewswire Inc. • 04/17/2024 12:00:00 PM
- Kratos Defense & Security Solutions, Inc. Completes Development of the Zeus Solid Rocket Motor (SRM) Family with the Successful Zeus 2 Static Test Fire • GlobeNewswire Inc. • 04/15/2024 01:00:00 PM
- Kratos Demonstrates Fully Virtualized SATCOM Over LEO for U.S. Army • GlobeNewswire Inc. • 04/04/2024 12:00:00 PM
- Kratos Announces New Director as Part of Ongoing Board Refresh and Augmentation Process • GlobeNewswire Inc. • 04/03/2024 08:08:11 PM
- Kratos Demonstrates XQ-58A Electronic Warfare Capabilities for United States Marine Corps • GlobeNewswire Inc. • 04/02/2024 12:00:00 PM
- Kratos and Shield AI Conduct AI-Piloted Flights on the Kratos Tactical Firejet • GlobeNewswire Inc. • 04/01/2024 12:00:00 PM
- Shield AI Conducts AI-Piloted Flights on Sixth Aircraft, the Kratos MQM-178 Firejet • PR Newswire (US) • 03/29/2024 12:55:00 PM
- Kratos Receives $57.6 Million Contract for 70 BQM-177A Aerial Targets • GlobeNewswire Inc. • 03/18/2024 12:00:00 PM
- Kratos Unmanned Systems Division Self-Driving Truck Leader Follower Platoon Fleet to Be Deployed in Ohio and Indiana • GlobeNewswire Inc. • 03/12/2024 12:00:00 PM
Avant Technologies Engages Wired4Tech to Evaluate the Performance of Next Generation AI Server Technology • AVAI • May 23, 2024 8:00 AM
Branded Legacy, Inc. Unveils Collaboration with Celebrity Tattoo Artist Kat Tat for New Tattoo Aftercare Product • BLEG • May 22, 2024 8:30 AM
"Defo's Morning Briefing" Set to Debut for "GreenliteTV" • GRNL • May 21, 2024 2:28 PM
North Bay Resources Announces 50/50 JV at Fran Gold Project, British Columbia; Initiates NI 43-101 Resources Estimate and Bulk Sample • NBRI • May 21, 2024 9:07 AM
Greenlite Ventures Inks Deal to Acquire No Limit Technology • GRNL • May 17, 2024 3:00 PM
Music Licensing, Inc. (OTC: SONG) Subsidiary Pro Music Rights Secures Final Judgment of $114,081.30 USD, Demonstrating Strength of Licensing Agreements • SONGD • May 17, 2024 11:00 AM