On May 15, Zacks Investment Research upgraded
Kratos Defense & Security Solutions Inc.
) to a Zacks Rank #1 (Strong Buy).
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Why the Upgrade?
Kratos Defense & Security Solutions has been witnessing
rising earnings estimates, thanks to a consistently strong
performance. The company registered an earnings surprise of
166.7% in the first quarter of 2013. Moreover, this national
security solutions provider registered positive earnings
surprises in the last five quarters with an average beat of
303.8%. The long-term expected earnings growth rate for this
stock is 6.5%
Kratos Defense & Security Solutions posted first quarter 2013
adjusted earnings of 6 cent per share, much ahead of the Zacks
Consensus Estimate of a loss of 9 cents. The quarterly revenue of
$253.0 million surpassed the Zacks Consensus Estimate of $237.0
million by 16%.
The positive catalysts for the stock are its diverse product
portfolio and its global customer base. No single customer
contract is expected to exceed 5% of the total projected revenue
for 2013. This in a way puts Kratos Defense & Security
Solutions in an advantageous position, reducing concentration
Moreover, both core and non-core assets contributed towards the
strong performance of the company. The contribution from
Composite Engineering, Inc. acquired in June 2012, boosted the
top line. In addition, steady research & development efforts
have expanded the company's product line-up catering to diverse
customer demand and enlarging its field of operation.
The Zacks Consensus Estimate for 2013 leaped 170.6% in the last
30 days to 29 cents per share as all the estimates were revised
higher over the said period. All estimates moved north for 2014
as well over the past one month, catapulting the Zacks Consensus
Estimate by 833.3% to 56 cents per share, in the period.
Other Stocks to Consider
Besides Kratos Defense & Security Solutions other defense
related service providers worth accumulating now are
Orbital Sciences Corp.
Alliant Techsystems Inc.
). All these companies presently carry a Zacks Rank #2 (Buy).