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Kratos Defense (KTOS) to Post Q3 Earnings: What's in Store?

Zacks Equity Research

Kratos Defense & Security Solutions, Inc. KTOS is set to release third-quarter 2019 results on Nov 5, after market close.

In the last reported quarter, the company delivered a positive earnings surprise of 14.29%. Moreover, Kratos’ earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 132.74%.

Let’s see how things are shaping up prior to this announcement.

Factors at Play

During the third quarter, Kratos won a handful of major contracts, which might have boosted its third-quarter backlog.

During the second-quarter earnings call, the company announced the delivery of the Gremlin tactical drone UAVs to Dynetics. The company also received an initial contract funding from Dynetics for its Spartan program. We expect these synergies to have boosted Kratos’ third-quarter performance.

Also, in the second-quarter earnings call, the company revealed its revenue guidance of $175-$185 million for the third quarter. The Zacks Consensus Estimate for third-quarter revenues stands at $184 million, which lies above the mid-point of the company’s guidance and indicates a rise of 15.7% from the year-ago quarter’s reported figure.

Moreover, Kratos has been investing heavily in manufacturing and test equipment at its new Oklahoma facility, which in turn is likely to have pushed its production cost. This, in turn, is expected to have dampened the company’s bottom-line performance in the to-be-reported quarter.

The Zacks Consensus Estimate for Kratos’ third-quarter earnings is pegged at 4 cents, implying a 42.9% decline from the prior-year quarter’s reported figure.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Kratos in the third quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Kratos has an Earnings ESP of 0.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kratos Defense & Security Solutions, Inc. Price and EPS Surprise

Kratos Defense & Security Solutions, Inc. Price and EPS Surprise
Kratos Defense & Security Solutions, Inc. Price and EPS Surprise

Kratos Defense & Security Solutions, Inc. price-eps-surprise | Kratos Defense & Security Solutions, Inc. Quote

ADVERTISEMENT

Stock That Warrants a Look

Here are some companies in the Zacks Aerospace sector you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter.

Huntington Ingalls Industries, Inc. HII is scheduled to report third-quarter 2019 results on Nov 7. The company has an Earnings ESP of +2.09% and a Zacks Rank #3.

Recent Defense Releases

Northrop Grumman Corporation NOC reported third-quarter 2019 earnings of $5.49 per share, which surpassed the Zacks Consensus Estimate of $4.74 by 15.8%. However, the bottom line declined 22.8% from
$7.11 in the year-ago quarter.

Lockheed Martin Corp LMT reported third-quarter 2019 earnings of $5.66 per share, which surpassed the Zacks Consensus Estimate of $5.03 by 12.5%. The bottom line also improved 10.1% from $5.14 in the year-ago quarter.

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Huntington Ingalls Industries, Inc. (HII) : Free Stock Analysis Report
 
Northrop Grumman Corporation (NOC) : Free Stock Analysis Report
 
Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
 
Kratos Defense & Security Solutions, Inc. (KTOS) : Free Stock Analysis Report
 
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