Critical Review: Kratos Defense & Security Solutions (NASDAQ:KTOS) versus Rolls-Royce Holdings PLC (OTCMKTS:RYCEY)

Kratos Defense & Security Solutions (NASDAQ:KTOS) and Rolls-Royce Holdings PLC (OTCMKTS:RYCEY) are both large-cap aerospace companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, earnings, dividends, profitability, risk, valuation and analyst recommendations.

Analyst Recommendations

This is a breakdown of current recommendations for Kratos Defense & Security Solutions and Rolls-Royce Holdings PLC, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kratos Defense & Security Solutions	0	5	16	1	2.82
Rolls-Royce Holdings PLC	0	2	2	1	2.80

Kratos Defense & Security Solutions presently has a consensus price target of $98.28, suggesting a potential upside of 38.44%. Given Kratos Defense & Security Solutions’ stronger consensus rating and higher possible upside, equities research analysts plainly believe Kratos Defense & Security Solutions is more favorable than Rolls-Royce Holdings PLC.

Risk and Volatility

Kratos Defense & Security Solutions has a beta of 1.22, indicating that its share price is 22% more volatile than the S&P 500. Comparatively, Rolls-Royce Holdings PLC has a beta of 1.21, indicating that its share price is 21% more volatile than the S&P 500.

Profitability

This table compares Kratos Defense & Security Solutions and Rolls-Royce Holdings PLC’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Kratos Defense & Security Solutions	1.63%	3.34%	2.58%
Rolls-Royce Holdings PLC	N/A	N/A	N/A

Earnings & Valuation

This table compares Kratos Defense & Security Solutions and Rolls-Royce Holdings PLC”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kratos Defense & Security Solutions	$1.35 billion	9.87	$22.00 million	$0.13	546.08
Rolls-Royce Holdings PLC	$27.96 billion	5.41	$7.70 billion	N/A	N/A

Rolls-Royce Holdings PLC has higher revenue and earnings than Kratos Defense & Security Solutions.

Insider & Institutional Ownership

75.9% of Kratos Defense & Security Solutions shares are held by institutional investors. Comparatively, 0.1% of Rolls-Royce Holdings PLC shares are held by institutional investors. 1.5% of Kratos Defense & Security Solutions shares are held 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

Kratos Defense & Security Solutions beats Rolls-Royce Holdings PLC on 10 of the 12 factors compared between the two stocks.

About Kratos Defense & Security Solutions

Kratos Defense & Security Solutions, Inc. engages in the provision of mission critical products, services and solutions for United States national security priorities. It operates through the Kratos Government Solutions (KGS) and Unmanned Systems (US) segments. The KGS segment consists of an aggregation of KGS operating segments, including microwave electronic products, space, satellite and cyber, training solutions. The US segment refers to the unmanned aerial, unmanned ground, unmanned seaborne and related command, control and communications system businesses. The company was founded on December 19, 1994, and is headquartered in Round Rock, TX.

About Rolls-Royce Holdings PLC

Rolls-Royce Holdings plc develops and delivers complex power and propulsion solutions for air, sea, and land in the United Kingdom and internationally. The company operates through four segments: Civil Aerospace, Defence, Power Systems, and New Markets. The Civil Aerospace segment develops, manufactures, markets, and sells aero engines for large commercial aircraft, regional jet, and business aviation markets, as well as provides aftermarket services. The Defence segment is involved in the development, manufacture, marketing, and sale of military aero engines, naval engines, and submarine nuclear power plants, as well as offers aftermarket services. The Power Systems segment engages in the development, manufacture, marketing, and sale of integrated solutions for onsite power and propulsion under the mtu brand name. The New Markets segment develops, manufactures, and sells small modular reactor and new electrical power solutions. Rolls-Royce Holdings plc was founded in 1884 and is headquartered in London, the United Kingdom.