Kratos CEO Sold $19M at $64. Stock Now Trades at $47.
Kratos Defense CEO Eric Demarco liquidated approximately $19.3 million in company stock on August 14 — ten days after Q2 earnings — at prices between $63 and $66 per share. KTOS now trades at $46.69,
Kratos CEO Sold $19M at $64. Stock Now Trades at $47.
NEW YORK, September 11 —
Kratos Defense & Security Solutions, Inc. (KTOS) has beaten Wall Street's EPS estimates in each of the last four quarters, each time by a wider margin, yet CEO Eric Demarco liquidated $19.3 million in shares on August 14, ten days after Q2 results, at prices between $63 and $66, more than a third above where the stock trades today.
- Q2 EPS of $0.21 beat the consensus by 39.5%; trailing-twelve-month revenue grew 30.5% to $1.52 billion.
- CEO Demarco sold 300,000 shares at $63 to $66 on August 14; six executives combined for $24.4 million in 90-day sales, zero purchases.
- Free cash flow was negative $118 million trailing; KTOS trades at 41.8x forward P/E, down 63% from its all-time high.
The CFO Sold Before Earnings, the CEO After
CFO Deanna Lund sold 5,000 shares on August 3, the day before Kratos filed its Q2 8-K, at prices between $46.55 and $48.95. Ten days after filing, CEO Eric Demarco sold 300,000 shares in four tranches at $63.33 to $66.17, collecting roughly $19.3 million. STC Division President Phillip Carrai sold 26,500 shares at $63 to $65 three days later; Director Scot Jarvis sold 10,000 shares at $63.50 a day after that. Six executives sold a combined $24.4 million in 90 days with no purchases. The CFO's sale predated the filing; the CEO's came after, at prices more than a third above where KTOS trades today.
Thirty Percent Growth Without the Cash to Show for It
Kratos builds jet-powered drone systems, hypersonic vehicles, and rocket and missile propulsion for the U.S. Department of Defense, a hardware mix that has driven 30.5% trailing revenue growth to $1.52 billion. The bull case rests on that trajectory. The problem is the engine: free cash flow was negative $118 million in the trailing twelve months, gross margin stands at 23%, and a DCF model at 41.8x forward earnings with no current cash generation requires aggressive assumptions about future profitability. Consecutive EPS beats against consensus are encouraging, but they do not resolve the gap between reported growth and cash actually produced.
| Ticker | Mkt cap | Fwd P/E | 52-wk |
|---|---|---|---|
| KTOS | $8.8B | 41.8x | -32.1% |
| AVAV | $7.5B | 32.9x | -39.5% |
| RCAT | $1.2B | n/a | -26.5% |
| ONDS | $4.1B | n/a | +10.5% |
| RDW | $2.7B | n/a | +25.1% |
| LHX | $45.7B | 18.3x | -11.0% |
What the $104 Target Requires
The median analyst price target of $104.20 implies more than double the current KTOS price, resting on one assumption: that Kratos's drone and hypersonic programs eventually generate cash. Grounds for the bull case exist. The company's aerial target vehicle has logged 43 successful missions in missile-defense testing, and Kratos holds $1.44 billion in cash against just $0.19 billion in debt. The countervailing signal is a management team holding 1.3% of the float that sold into it without a single offsetting purchase. The number to watch next quarter is operating cash flow; turning positive validates the bull case, while another negative quarter deepens the question insiders have already answered for themselves. Run the free Kratos Defense & Security Solutions, Inc. deep-dive →
Basis Report is independent research for informational purposes. It is not investment advice and not a recommendation to buy or sell any security.
Kratos Defense CEO Eric Demarco liquidated approximately $19.3 million in company stock on August 14 — ten days after Q2 earnings — at prices between $63 and $66 per share. KTOS now trades at $46.69, and six executives sold a combined $24.4 million in the 90-day window with zero insider purchases.