How Is Kratos Defense Benefiting From Surging SRM Demand?

Kratos Defense & Security Solutions, Inc. KTOS benefits from affordable rocket systems and solid rocket motors (SRMs), as these products are important in the fast-growing hypersonic weapons and testing market.

Kratos Defense’s Zeus SRMs are designed to provide low-cost, high-performance propulsion for hypersonic tests, missile targets, sounding rockets and other defense missions. Zeus 1 and 2 offer enhanced performance within the same form factor as legacy SRMs, enabling seamless integration, particularly with Kratos’ Erinyes and Dark Fury hypersonic flyers.

By using proven designs, the Zeus family enables more frequent, longer and cheaper test flights. Because of this, defense customers who need to accelerate hypersonic development will find Kratos Defense useful. Overall, Kratos Defense's approach gives them a significant competitive advantage since it provides useful, reasonably priced technology at a time when the need for hypersonic testing is rapidly increasing.

Kratos Defense’s Oriole Rocket Motor System is a versatile propulsion system for suborbital launch vehicles used in targets, science missions and microgravity research. It includes a redundant digital ignition system for safe starts, optional thrust-vector control for maneuvering, and a strong tail section that can support different fin sizes to keep the rocket stable throughout flight.

The company’s affordable rocket technology allows it to deliver high-performance systems quickly and cost-effectively, giving it a strong edge in the expanding defense launch market.

Defense Giants Race to Expand Rocket Motor Production

Major defense companies that are expanding their production capacity to benefit from the increasing demand for rocket motors and SRMs have been discussed below:

L3Harris Technologies LHX plans to boost its large SRM manufacturing capacity six times with the addition of more than 20 facilities. The company's Camden, AR, site is still expanding to satisfy the country's increasing SRM production needs.

Northrop Grumman NOC is rapidly scaling production and has delivered more than 1.3 million SRMs, providing the Department of Defense, NASA, and allies with reliable propulsion for missile defense, space launches and scientific missions.

KTOS Stock’s Earnings Estimates

The Zacks Consensus Estimate for 2025 and 2026 EPS indicates an increase of 4.08% and 38.95%, respectively, year over year.

KTOS Stock Trades at a Discount

In terms of valuation, KTOS’ forward 12-month price-to-sales (P/S) is 8.22X, a discount to the industry’s average of 9.87X.

KTOS Stock’s Price Performance

In the past six months, KTOS’ shares have risen 95.8% compared with the industry’s 7.8% growth.

KTOS’ Zacks Rank

The company currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
 

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This article originally published on Zacks Investment Research (zacks.com).

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