Kratos Defense

KTOS · Nasdaq · Defense supply chain Owned Preliminary thesis

Preliminary thesis dated Nov 11, 2026. Full write-up to follow.

At a glance

Bought: Feb 11, 2025 · $32.92
Tracked since: Nov 11, 2026 · $36.69
Price (Nov 11, 2026): $36.69
Weight / target for the leg: 15.0% / 20%

The short version

Kratos does not need to win every airframe contract. The majority of its business is in engines, satcom, and ground control systems sold to other companies’ drones and missiles, with Valkyrie representing additional upside. As assembly costs decrease, the bottleneck shifts to components, which Kratos is producing.

Where I differ from the market

Market thinks: Kratos lost the Air Force drone wingman contest, its unmanned business is contracting, and it is burning cash while issuing stock.
I think: Kratos does not need to win every airframe contract. The majority of its business is in engines, satcom, and ground control systems sold to other companies’ drones and missiles, with Valkyrie representing additional upside. As assembly costs decrease, the bottleneck shifts to components, which Kratos is producing.
Right when: Engine deliveries reach approximately 1,500 in 2027 without additional stock issuance.
Wrong if: The engine production ramp is delayed, Kratos issues more stock, or margins remain flat as revenue increases.

What the full write-up adds

A value range with bear, base and bull cases, sized catalysts and risks, and a worst case that sets the position size. This preliminary thesis stays on the page, dated, when the full version goes up.

Update log

Nov 11, 2026Preliminary thesis published.