Valued at a market cap of $8.4 billion, Kratos Defense & Security Solutions (KTOS) is a technology company providing defense and security solutions globally. It operates through two segments: Kratos Government Solutions and Unmanned Systems.
Kratos offers satellite ground systems, unmanned aerial drones, hypersonic vehicles, propulsion systems, command and control systems, microwave electronics, counter-drone systems, and virtual reality training. Kratos primarily serves defense agencies and international customers.
Kratos stock has more than doubled in the last 12 months and is up almost 300% in the last three years. Let’s see if Kratos Defense is still a good stock to own right now.
Kratos Defense stock surged after Defense Secretary Pete Hegseth announced aggressive support for domestic drone production, marking a significant milestone for the unmanned systems specialist.
The Pentagon’s renewed focus on drone capabilities represents a tailwind for Kratos. Hegseth’s July 11 memorandum rescinding restrictive policies that previously hindered drone production removes critical barriers that have constrained the industry. His acknowledgment that “drones are the biggest battlefield innovation in a generation” validates Kratos’ strategic positioning in the unmanned aerial systems market.
The accelerated timeline for drone development is encouraging. The Defense Department showcased 18 American-made prototypes that moved from concept to development in just 18 months, a dramatic improvement from the typical six-year process. This rapid innovation cycle favors agile companies like Kratos that specialize in cost-effective, off-the-shelf solutions.
President Donald Trump’s executive order in June to streamline drone production approval processes further supports the investment thesis. The administration’s three-pronged approach, which includes prioritizing American-made drones, arming units with low-cost systems, and expanding training programs, aligns with Kratos’ capabilities in unmanned systems and defense technology.
The U.S. military aims to rapidly scale domestic production of drones. Kratos’ established expertise in jet-powered unmanned systems, combined with supportive policy changes and streamlined regulations, creates a compelling growth opportunity for investors willing to capitalize on the United States' drone modernization initiative.
