Critical Review: Orbital ATK (OA) versus Kratos Defense & Security Solutions (KTOS)

Orbital ATK (NYSE: OA) and Kratos Defense & Security Solutions (NASDAQ:KTOS) are both industrials companies, but which is the better business? We will contrast the two companies based on the strength of their profitability, earnings, institutional ownership, dividends, valuation, analyst recommendations and risk.

Insider & Institutional Ownership

85.8% of Orbital ATK shares are owned by institutional investors. Comparatively, 71.4% of Kratos Defense & Security Solutions shares are owned by institutional investors. 1.2% of Orbital ATK shares are owned by company insiders. Comparatively, 17.9% of Kratos Defense & Security Solutions shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Orbital ATK and Kratos Defense & Security Solutions, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Orbital ATK 0 8 2 0 2.20
Kratos Defense & Security Solutions 0 4 5 0 2.56

Orbital ATK presently has a consensus target price of $120.07, indicating a potential downside of 8.99%. Kratos Defense & Security Solutions has a consensus target price of $13.06, indicating a potential upside of 14.32%. Given Kratos Defense & Security Solutions’ stronger consensus rating and higher probable upside, analysts plainly believe Kratos Defense & Security Solutions is more favorable than Orbital ATK.

Profitability

This table compares Orbital ATK and Kratos Defense & Security Solutions’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Orbital ATK 6.62% 17.32% 6.08%
Kratos Defense & Security Solutions -3.39% -1.21% -0.45%

Valuation & Earnings

This table compares Orbital ATK and Kratos Defense & Security Solutions’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Orbital ATK $4.46 billion 1.71 $293.00 million $5.40 24.43
Kratos Defense & Security Solutions $668.70 million 1.76 -$60.50 million ($0.31) -36.84

Orbital ATK has higher revenue and earnings than Kratos Defense & Security Solutions. Kratos Defense & Security Solutions is trading at a lower price-to-earnings ratio than Orbital ATK, indicating that it is currently the more affordable of the two stocks.

Dividends

Orbital ATK pays an annual dividend of $1.28 per share and has a dividend yield of 1.0%. Kratos Defense & Security Solutions does not pay a dividend. Orbital ATK pays out 23.7% of its earnings in the form of a dividend.

Volatility & Risk

Orbital ATK has a beta of 0.43, meaning that its stock price is 57% less volatile than the S&P 500. Comparatively, Kratos Defense & Security Solutions has a beta of 1.81, meaning that its stock price is 81% more volatile than the S&P 500.

Summary

Orbital ATK beats Kratos Defense & Security Solutions on 9 of the 16 factors compared between the two stocks.

About Orbital ATK

Orbital ATK, Inc. is an aerospace and defense systems company and supplier of related products to the United States Government, allied nations, prime contractors and other customers. The Company’s segments include Flight Systems Group, Defense Systems Group, Space Systems Group and Corporate. Its products include launch vehicles and related propulsion systems; satellites and associated components and services; tactical missiles, subsystems and defense electronics, and precision weapons, armament systems and ammunition. The Flight Systems Group segment consists of Launch Vehicles Division, Propulsion Systems Division and Aerospace Structures Division. The Defense Systems Group segment consists of Armament Systems Division, Defense Electronic Division, Missile Products Division and Small Caliber Systems Division. The Space Systems Group consists of Commercial Satellites Division, Government Satellites Division, Space Components Division and Technical Services Division.

About Kratos Defense & Security Solutions

Kratos Defense & Security Solutions, Inc. is a technology, intellectual property and proprietary product and solution company focused on the United States and its allies’ national security. The Kratos Government Solutions segment includes the operations of Defense Rocket Support Services, Microwave Electronics Division, Technical and Training Solutions, and Modular Systems, which provide technology-based defense solutions, involving products and services, with the focus relating to the nation’s Command, Control, Communications, Computing, Combat Systems, Intelligence, Surveillance and Reconnaissance requirements. The Unmanned Systems segment includes its unmanned aerial, ground, seaborne and command, control and communications system business. The Public Safety & Security segment provides integrated solutions for homeland security, public safety, critical infrastructure, and security and surveillance systems for government and commercial applications.

Receive News & Ratings for Orbital ATK Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Orbital ATK and related companies with MarketBeat.com's FREE daily email newsletter.

Latest News

Leave a Reply