NEW YORK (
) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, poor profit margins and generally weak debt management.
Highlights from the ratings report include:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Aerospace & Defense industry. The net income has significantly decreased by 148.6% when compared to the same quarter one year ago, falling from $10.70 million to -$5.20 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Aerospace & Defense industry and the overall market, KRATOS DEFENSE & SECURITY's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$6.70 million or 193.05% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The gross profit margin for KRATOS DEFENSE & SECURITY is currently lower than what is desirable, coming in at 33.20%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, KTOS's net profit margin of -3.00% significantly underperformed when compared to the industry average.
- The debt-to-equity ratio is very high at 2.27 and currently higher than the industry average, implying that there is very poor management of debt levels within the company. Regardless of the company's weak debt-to-equity ratio, KTOS has managed to keep a strong quick ratio of 2.15, which demonstrates the ability to cover short-term cash needs.
Kratos Defense & Security Solutions, Inc. provides engineering, war fighter, security, and information technology services, solutions, and products in the United States. The company has a P/E ratio of 4.3, below the S&P 500 P/E ratio of 17.7. Kratos Defense & Security has a market cap of $284.2 million and is part of the
industry. Shares are down 38.3% year to date as of the close of trading on Tuesday.
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