Forensic Analysis · Aerospace & Defense · as of Nov 9, 2026
Kratos Defense & Security Solutions, Inc. (KTOS)
A forensic read on Kratos Defense & Security Solutions, Inc. built from its complete SEC filings — financial-health screens, earnings quality, red flags and a price-aware rating. Reproducible math, not opinion.
D · Weak — demands caution
Forensic grade
Safe
Financial health
6.2
Distress distance
5
Forensic signals
1.3%
ROE
18.5%
Revenue growth
This free snapshot doesn't read filing or proxy text, so the auditor-quality and governance checks that can lower a grade were not evaluated (auditor quality, say on pay, board independence, going concern). Those checks only ever lower a grade, so the full analysis can land below the grade above but never above it — treat it as the most favourable reading, not the settled one.
Kratos Defense & Security Solutions, Inc. earns a D (Weak — demands caution) forensic quality grade, and its balance-sheet distress test reads 6.2, placing it in the Safe zone. 5 forensic signals were flagged in its latest SEC filings, led by return on invested capital.
What the filings flag
1.1%
FY2025
Return on invested capital.Return on invested capital is 1.1% in the latest fiscal year and steady across FY2023–FY2025, inside a 0.5-point range. After-tax operating profit was $20M in FY2023 and $17M in FY2025, with operating income at 3.0% of revenue in FY2023, 2.6% in FY2024 and 1.9% in FY2025. The capital base behind it grew +15% across FY2023–FY2025, from $1.3B to $1.5B, while the return fell 0.5 points, so the dollars added over that window earned less than the 1.6% the older base was already earning.
+12.6%/yr
FY2023–FY2025
Share-count dilution.Diluted share count changed +27% over the last 2 years to FY2025 (+12.6%/yr). The count is growing — 130.4M shares in FY2023, 165.2M in FY2025: more stock was issued than repurchased over this window, so aggregate results grew faster than their per-share equivalents. That's ~12.6% shaved off per-share growth every year — total profit has to grow that much just to keep earnings-per-share flat, and a stake held since FY2023 has been diluted ~21%.
+15.2%
FY2024→FY2025
Accruals ratio (% of NOA).Net operating assets grew +15.2% relative to their own average in FY2025 — scaled by NOA itself, not by total assets, which is what the Forensic Screens card's own accrual row divides by. Accruals are building faster than is comfortable — part of profit is sitting in the balance sheet rather than turning to cash. Net operating assets also rose $37.2M through acquisitions (shares issued for businesses); that purchase is investing and is excluded from this ratio. The build is led by inventory up +60% against +22% in cost of sales and receivables up +40% against revenue +19%. A cash-flow measure on the same base disagrees: reported earnings ran in line with operating cash by 5% of net operating assets, against an accruals ratio of 15.2%. The two are computed differently: the accruals ratio is the change in net operating assets over average net operating assets, while the cash-flow figure is net income less operating cash flow over that same average. Read them as two results, not one.Accruals ratio: the year-over-year change in net operating assets, relative to their own average.NOA (net operating assets): the money tied up in running the business, operating assets minus operating liabilities.
45d DSO
FY2024→FY2025
Receivables vs revenue.Days sales outstanding moved from 38 to 45 days FY2024→FY2025 (receivables +40% vs revenue +19%). Receivables are creeping up relative to sales. Across FY2023–FY2025 the day count ran 45 → 38 → 45 days, so the latest reading sits on top of a record that was flat or falling before it — one year's move, not a direction the business has been travelling in. Deferred revenue was roughly flat (-4%) over the same period, which doesn't corroborate a benign upfront-billing explanation for the receivables build. Both figures are measured on period-end balances rather than the beginning-plus-ending average, because averaging needs the balance a year before every reading — FY2024's opening balance is on file, but across the 3 fiscal years read here (FY2023–FY2025) the average yields only 2 day counts (1 step), too few to tell a climb from one year's move.DSO (days sales outstanding): the average days the company waits to collect cash after a sale.
3% of rev
FY2025
Stock-based comp load.Stock-based compensation ran 3% of revenue in FY2025 — about $0.21 per diluted share. No cash left the business to pay it, which is why operating cash flow adds it back. Net of repurchases the diluted count still rose about 12.6% a year across FY2023–FY2025, and the rate is falling. Stock compensation is one source of that issuance; acquisition consideration, equity raises, convertibles and other employee plans also net into the count, and these figures do not separate them.
Key fundamentals
Latest Revenue$1.35B
Revenue Growth YoY+18.5%
Revenue CAGR (2yr)+14.0%
Net Margin1.6%
Free Cash Flow-$137.4M
Return on Equity1.3%
Debt / Equity0.00x
The forensic grade and screens above are free — no account needed. Want the AI investment read on top — the 0–100 rating, thesis, bull-vs-bear, red flags and the 12-month scenario, written from Kratos Defense & Security Solutions, Inc.'s actual 10-K/10-Q/8-K filings?