Head-To-Head Review: Kratos Defense & Security Solutions (KTOS) and Lockheed Martin Corporation (LMT)

Kratos Defense & Security Solutions (NASDAQ: KTOS) and Lockheed Martin Corporation (NYSE:LMT) are both aerospace companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, earnings, risk, dividends, profitability and analyst recommendations.

Dividends

Lockheed Martin Corporation pays an annual dividend of $7.28 per share and has a dividend yield of 2.3%. Kratos Defense & Security Solutions does not pay a dividend. Lockheed Martin Corporation pays out 59.0% of its earnings in the form of a dividend. Lockheed Martin Corporation has increased its dividend for 14 consecutive years.

Volatility & Risk

Kratos Defense & Security Solutions has a beta of 1.91, meaning that its share price is 91% more volatile than the S&P 500. Comparatively, Lockheed Martin Corporation has a beta of 0.58, meaning that its share price is 42% less volatile than the S&P 500.

Profitability

This table compares Kratos Defense & Security Solutions and Lockheed Martin Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Kratos Defense & Security Solutions -3.39% -1.21% -0.45%
Lockheed Martin Corporation 7.31% 221.41% 7.65%

Earnings and Valuation

This table compares Kratos Defense & Security Solutions and Lockheed Martin Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Kratos Defense & Security Solutions $668.70 million 1.56 -$60.50 million ($0.32) -31.50
Lockheed Martin Corporation $47.25 billion 1.90 $5.30 billion $12.33 25.45

Lockheed Martin Corporation has higher revenue and earnings than Kratos Defense & Security Solutions. Kratos Defense & Security Solutions is trading at a lower price-to-earnings ratio than Lockheed Martin Corporation, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings for Kratos Defense & Security Solutions and Lockheed Martin Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Kratos Defense & Security Solutions 0 2 5 0 2.71
Lockheed Martin Corporation 0 5 9 0 2.64

Kratos Defense & Security Solutions currently has a consensus target price of $13.43, suggesting a potential upside of 33.22%. Lockheed Martin Corporation has a consensus target price of $319.77, suggesting a potential upside of 1.92%. Given Kratos Defense & Security Solutions’ stronger consensus rating and higher possible upside, equities analysts clearly believe Kratos Defense & Security Solutions is more favorable than Lockheed Martin Corporation.

Insider & Institutional Ownership

64.7% of Kratos Defense & Security Solutions shares are owned by institutional investors. Comparatively, 79.3% of Lockheed Martin Corporation shares are owned by institutional investors. 23.2% of Kratos Defense & Security Solutions shares are owned by company insiders. Comparatively, 0.4% of Lockheed Martin Corporation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

Lockheed Martin Corporation beats Kratos Defense & Security Solutions on 11 of the 16 factors compared between the two stocks.

About Kratos Defense & Security Solutions

Kratos Defense & Security Solutions, Inc. is a technology, intellectual property and proprietary product and solution company focused on the United States and its allies’ national security. The Kratos Government Solutions segment includes the operations of Defense Rocket Support Services, Microwave Electronics Division, Technical and Training Solutions, and Modular Systems, which provide technology-based defense solutions, involving products and services, with the focus relating to the nation’s Command, Control, Communications, Computing, Combat Systems, Intelligence, Surveillance and Reconnaissance requirements. The Unmanned Systems segment includes its unmanned aerial, ground, seaborne and command, control and communications system business. The Public Safety & Security segment provides integrated solutions for homeland security, public safety, critical infrastructure, and security and surveillance systems for government and commercial applications.

About Lockheed Martin Corporation

Lockheed Martin Corporation is a security and aerospace company. The Company operates through four segments. Aeronautics segment is engaged in the research, design, development, manufacture, integration, sustainment, support and upgrade of military aircraft, including combat and air mobility aircraft, unmanned air vehicles and related technologies. Missiles and Fire Control segment provides air and missile defense systems; fire control systems; manned and unmanned ground vehicles, and energy management solutions. Rotary and Mission Systems segment provides design, manufacture, service and support for a range of military and civil helicopters; mission systems and sensors for rotary and fixed-wing aircraft; simulation and training services, and unmanned systems and technologies, among others. Space Systems segment is engaged in the research and development, design, engineering and production of satellites, strategic and defensive missile systems and space transportation systems.

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