Why Kratos Defense & Security Solutions, Inc. Shares Crumbled Today

Is Kratos' plunge meaningful? Or just another movement?

Mar 12, 2014 at 7:44PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) fell nearly 12% during Wednesday's intraday trading, then recovered to close down around 5% after the company released mixed fourth-quarter results and light forward revenue guidance.

So what: Quarterly revenue fell 10.6% to $235.7 million, which translated to pro forma earnings from continuing operations of $0.06 per share. Analysts, on average, were looking for earnings of $0.06 per share on significantly higher sales of $251.73 milion.

For the full year 2014, Kratos expects revenue of $920 million to $980 million, the midpoint of which also stands below analysts' expectations for 2014 sales of $972.03 million.

Now what: Keep in mind that on a GAAP basis, Kratos reported a $0.13 per share loss. However, Kratos insists reporting pro forma earnings per share as a "meaningful metric" to determine the company's performance, especially given its historical tendency to grow through acquisitions. To be sure, despite its lack of GAAP profitability for now, investors can take some comfort in knowing Kratos expects to generate free cash flow of $25 million to $40 million this year.

With shares currently trading below 0.5 times last year's sales and a reasonable 15 times this year's estimated earnings, today's drop might just prove a decent buying opportunity for patient long-term investors.

This weapon could be America's greatest defense
U.S. News and World Report says this "will drive the U.S. economy." And Business Insider calls it "the growth force of our time." In a special report titled "America's $2.89 Trillion Super Weapon Revealed," you'll learn specific steps you can take to capitalize on this massive growth opportunity. But act now, because this is your shot to cash in before the fat cats on Wall Street beat you to the potentially life-changing profits. Click here now for instant access to this free report.

Steve Symington and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information