November 30, 2023
Top 10 Stock Kratos Defense & Security Buy Recommendation

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For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).

360° View: Obermatt 360° View Kratos Defense & Security Buy

360 METRICS	November 30, 2023
VALUE
VALUE	43
GROWTH
GROWTH	65
SAFETY
SAFETY	77
SENTIMENT
SENTIMENT	31
360° VIEW
360° VIEW	67

ANALYSIS: With an Obermatt 360° View of 67 (better than 67% compared with alternatives), overall professional sentiment and financial characteristics for the stock Kratos Defense & Security are above average. The 360° View is based on consolidating four consolidated indicators, with half of the metrics below and half above average for Kratos Defense & Security. The consolidated Growth Rank has a good rank of 65, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. This means that growth is higher than for 65% of competitors in the same industry. In addition, the consolidated Safety Rank has a safer rank of 77 which means that the company has a financing structure that is safer than 77% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the consolidated Value Rank has a less desirable rank of 43 which means that the share price of Kratos Defense & Security is on the higher side compared with typical size in indicators such as revenues, profits, and invested capital. This means that the stock price is higher than for 57% of alternative stocks in the same industry. The consolidated Sentiment Rank also has a low rank of 31, which means that professional investors are more pessimistic about the stock than for 69% of alternative investment opportunities. ...read more

RECOMMENDATION: With a consolidated 360° View of 67, Kratos Defense & Security is better positioned than 67% of all alternative stock investment opportunities based on the Obermatt Method. As only half of the consolidated Obermatt Ranks exhibit excellent performance, the picture is ambiguous. Growth is above-average (Growth Rank of 65), and the company is safely financed (Safety Rank of 77). However, professional market sentiment is low(Sentiment Rank of 31). The negative market view on Kratos Defense & Security may be due to the high stock price (low value). A growth company like this may get too expensive at one point in time. If too many investors are desperate to board the train, they may drive stock prices above reasonable levels. It is typical for growth companies to have low value ratings, because investors are willing to pay more for companies that outperform their competitors. So the question is, how much more do you pay for the stock of Kratos Defense & Security compared with alternatives? You can use the following rule of thumb: The value rank shouldn’t be lower than one hundred minus the growth rank. For example, if the growth rank is at 75, and the value rank is at 5, you should tread carefully. If the value rank is at 40, it still might be a good value if the value rank is above 60. As market sentiment is low, you should be careful with paying more than market-average for this stock and conduct further research into the company’s future growth potential. ...read more

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Sentiment Strategy: Professional Market Sentiment for Kratos Defense & Security only reserved

SENTIMENT METRICS	November 30, 2023
ANALYST OPINION
ANALYST OPINION	42
OPINIONS CHANGE
OPINIONS CHANGE	40
PRO HOLDINGS
PRO HOLDINGS	53
MARKET PULSE
MARKET PULSE	50
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	31

ANALYSIS: With an Obermatt Sentiment Rank of 31 (better than 31% compared with alternatives), overall professional sentiment and engagement for the stock Kratos Defense & Security is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half above average for Kratos Defense & Security. Analyst Opinions are at a rank of 42 (worse than 58% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. Worse, Analyst Opinions Change has a rank of 40, which means that stock research experts are getting even more pessimistic. Other sentiment indicators are positive: The Professional Investors rank is 53, which means that professional investors hold more stock in this company than in 53% of alternative investment opportunities. So, pros tend to favor investing in this company. In addition, Market Pulse has a rank of 50, which means that the current professional news and professional social networks tend to be positive when discussing this company (more positive news than for 50% of competitors). While stock research analysts are getting ever more critical, many professional investors are committed to Kratos Defense & Security and the professional news channels are on the positive side. ...read more

RECOMMENDATION: With a consolidated Sentiment Rank of 31 (less encouraging than 69% compared with investment alternatives), Kratos Defense & Security has a reputation among professional investors that is below that of its competitors. This is an ambiguous picture: analysts are negative and getting even more critical, while the news in the market is positive. Who should investors believe? This is a difficult question in such a situation. Investors should proceed cautiously and verify not only the financial performance in the Obermatt Value, Growth and Safety Ranks but also independent news coverage of the company. ...read more

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Value Strategy: Kratos Defense & Security Stock Price Value below-average critical

VALUE METRICS	November 30, 2023
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	59
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	34
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	62
DIVIDEND YIELD
DIVIDEND YIELD	1
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	43

ANALYSIS: With an Obermatt Value Rank of 43 (worse than 57% compared with alternatives), Kratos Defense & Security shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, where half the indicators are below and half above average for Kratos Defense & Security. Price-to-Sales (P/S) is 59, which means that the stock price compared with what market professionals expect for future sales is lower than for 59% of comparable companies, indicating a good value concerning Kratos Defense & Security's revenue size. The same is valid for the Price-to-Book Capital ratio (also referred to as market-to-book ratio), which is more favorable than for 62% of alternatives (38% of peers have a higher ratio). But expected dividend yields with a Dividend Yield rank of 1 are lower than average (dividends are expected to be lower than 99% of other stocks) while the Price to Profit ratio (or Price to Earnings (P/E) ratio) is higher than average with a Price-to-Profit Rank of 34, making the stock more expensive compared with the company's expected profit levels. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 43, is a hold recommendation based on Kratos Defense & Security's stock price compared with the company's operational size and dividend yields. Low profits and low dividends as seen here for Kratos Defense & Security may indicate a restructuring phase. This could be transitory, making the company a good value when profits recover and dividends return to higher levels. If the stock price is compared with the size indicators for revenue and invested capital, it is on the lower side, making this stock a good value investment (apart from current profit and dividend expectations). ...read more

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Growth Strategy: Kratos Defense & Security Growth Momentum good

GROWTH METRICS	November 30, 2023
REVENUE GROWTH
REVENUE GROWTH	39
PROFIT GROWTH
PROFIT GROWTH	36
CAPITAL GROWTH
CAPITAL GROWTH	75
STOCK RETURNS
STOCK RETURNS	95
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	65

ANALYSIS: With an Obermatt Growth Rank of 65 (better than 65% compared with alternatives), Kratos Defense & Security shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Kratos Defense & Security. Capital Growth has a rank of 75, which means that currently professionals expect the company to grow its invested capital more than 36% of its competitors. Investors welcomed this, visible in the Stock Returns rank of 95 (above 95% of alternative investments). But Sales Growth has only a rank of 39, which means that, currently, professionals expect the company to grow less than 61% of its competitors, and Profit Growth is also low at a rank of 36. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 65, is a buy recommendation for growth and momentum investors. This is an ambiguous picture. Revenue growth and capital growth are strong, but the growth in profit, which seems good, can also be an indication that growth momentum may be negative. The fact that stock returns have been above average doesn't help much, as stock returns are less reliable in showing a company’s future growth potential. Prices may perform well for the simple reason that investors were too pessimistic in the past and are now correcting their opinions and moving the stock price to a more reasonable level. As the growth picture is mixed for Kratos Defense & Security, investors may want to look at value and sentiment indicators for a well-rounded picture of this stock. ...read more

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Safety Strategy: Kratos Defense & Security Debt Financing Safety very solid

SAFETY METRICS	November 30, 2023
LEVERAGE
LEVERAGE	53
REFINANCING
REFINANCING	66
LIQUIDITY
LIQUIDITY	67
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	77

ANALYSIS: With an Obermatt Safety Rank of 77 (better than 77% compared with alternatives) for 2023, the company Kratos Defense & Security has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Kratos Defense & Security is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, where all three are above average for Kratos Defense & Security. Leverage is at 53, meaning the company has a below-average debt-to-equity ratio. It has less debt than 53% of its competitors. Refinancing is at a rank of 66, meaning that the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 66% of its competitors. Finally, Liquidity is also good at a rank of 67, which means that the company generates more profit to service its debt than 67% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 77 (better than 77% compared with alternatives), Kratos Defense & Security has a financing structure that is significantly safer than that of its competitors. These three positive financing indicators signal that the company is less likely to default on its debt obligations. However, it also means that its shareholder returns will be more modest if things go well. A low safety means fewer troubles in downtimes and less upside in good times. ...read more

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Combined financial peformance: Kratos Defense & Security Top Financial Performance

COMBINED PERFORMANCE	November 30, 2023
VALUE
VALUE	43
GROWTH
GROWTH	65
SAFETY
SAFETY	67
COMBINED
COMBINED	82

ANALYSIS: With an Obermatt Combined Rank of 82 (better than 82% compared with investment alternatives), Kratos Defense & Security (Aerospace & Defense, USA) shares have much better financial characteristics than comparable stocks. Shares of Kratos Defense & Security are low in value (priced high) with a consolidated Value Rank of 43 (worse than 57% of alternatives). But they show above-average growth (Growth Rank of 65) and are safely financed (Safety Rank of 77, which means below-average debt burdens). ...read more

RECOMMENDATION: A Combined Rank of 82, is a strong buy recommendation based on Kratos Defense & Security's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company Kratos Defense & Security exhibits low value (Obermatt Value Rank of 43), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 65). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 77) are a double-edged sword: if the company continues growing, low debt limits shareholder returns. But if the company increases its debt, it will also increase risk. In other words, this is an investment on the safer side, despite the above-average price (low value). ...read more

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