Long KTOS (2026-11-09) · Hangar pitch

long KTOS 2026-11-09

Backlog nearly doubled in five quarters, from contracts that never show up in the daily award lists

Status

open

Horizon

12 months

Author's position

does not hold KTOS (on the pitch date)

Prices

KTOS since 2026-11-09 on Yahoo Finance Hangar shows no prices (why)

Company

KTOS awards, backlog and revenue

Personal opinion of a student, not investment advice.

Thesis

Kratos' remaining performance obligations (RPO) rose from $1.41 billion at June 29, 2025 (10-Q) to $2.65 billion at September 27, 2026 (10-Q), up 87%. Revenue grew from $1.14 billion in 2024 (10-K) to $1.35 billion in 2025 (10-K), up 19%. RPO is now about twice 2025 revenue.

My view: revenue growth stays near or above 2025's 19% over the next year, because the backlog grew far faster than revenue.

Evidence

Since November 2025, Hangar has matched only three Department of War announcements to Kratos, and none of them has a definite amount: two indefinite-delivery contracts and one shared pool. So the backlog growth came from work that is not in the daily announcements of $7.5 million or more: smaller awards, subcontracts, other agencies or other customers.
That also means contract announcements are a poor way to follow Kratos; its 10-Q is the better source.

Catalysts

The 2026 10-K and the 2027 quarterly reports: revenue growth and RPO.

Risks / what would prove me wrong

I don't yet know which contracts make up the new backlog; if most of it is long-dated, revenue will lag.
Kratos is small, so a single program delay moves its numbers.
I'm wrong if revenue for the four quarters ending September 2027 grows less than 15% compared with the four quarters before, or if RPO falls below $2.0 billion.

Valuation

No view on valuation here: this is a call on revenue growth, and Hangar shows no prices. A student's opinion, not investment advice.

Fingerprint (SHA-256) 82f3f63830a2bf009abc0c994f74efa761f048efc095754f8dc8e4d51a89350a
First published 2026-11-09
Internet Archive copy

Update 2026-11-09

Adding the price side of the pitch, which the original left out.

Entry price: $35.10, Kratos' closing price on Friday, November 6, 2026, the last close before this pitch was published (looked up on Yahoo Finance). For comparison, SPY (an S&P 500 fund) closed at $735.29 that day, so the pitch can be scored against the market.

Valuation: enterprise value to sales (EV/sales). Enterprise value is the share price times shares outstanding, plus debt, minus cash. Prices are Friday, November 6 closes from Yahoo Finance; everything else is from each company's latest SEC filing.

KTOS: 3.2x. $35.10 × 188.3 million shares, no long-term debt reported, $1,404 million cash; revenue $1,647 million over the four quarters to September 27, 2026 (10-Q, 10-K).
AeroVironment (AVAV): 3.1x. $112.76 × 50.8 million shares, $748 million debt, $278 million cash; revenue $2,003 million over the four quarters to August 1, 2026 (10-Q, 10-K).
Mercury Systems (MRCY): 4.7x. $73.55 × 60.1 million shares, $442 million debt, $214 million cash; revenue $984 million in the fiscal year to July 3, 2026 (10-K).
L3Harris (LHX): 2.4x. $259.89 × 186.2 million shares, $10,996 million debt, $2,471 million cash; revenue $23,333 million over the four quarters to October 2, 2026 (10-Q, 10-K). This uses L3Harris' 2025 revenue of $21,865 million, which its 10-K tags to a 3-month period; I treat it as the full year.

So Kratos is valued like AeroVironment, below Mercury and above L3Harris, while its backlog grew 87% in five quarters. The market is not paying a large premium for that growth.

12-month price target: $40 (up 15%). If revenue over the next four quarters grows 19% (2025's rate) to about $1,960 million and Kratos keeps its 3.2x EV/sales, enterprise value reaches about $6,190 million; adding today's $1,404 million cash and dividing by 188.3 million shares gives $40.35. I keep the multiple flat on purpose, so the target comes only from revenue growth.

What changes the call: I'm wrong on the stock if it is below $35.10 in November 2027, or if it trails SPY's return over the same 12 months.

Fingerprint (SHA-256) f1f94c23f532eecc56b7ec833a6d4a1aa2fc2ee8178914d64ead2c0d30624eb7
First published 2026-11-09
Internet Archive copy

What happened since

Hangar's own data on KTOS after 2026-11-09, every number linked to its source. Contract announcements through 2026-11-06.

From SEC filings	Known on 2026-11-09	Latest
RPO (backlog)	$2.65B	$2.65B no new filing
Revenue, latest fiscal year	$1.35B	$1.35B no new filing

0 contract announcements since the pitch: $0 definite (0), $0 potential (0).