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Kratos announced $65 million in new military contract wins this morning.
It's unclear whether the $65 million comes in a single year, or spread across several years.
After four straight days of declines, Kratos Defense & Security (NASDAQ: KTOS) stock finally bounced a bit on Tuesday.
Shares of the military drones specialist gained 2.1% through 10:05 a.m. ET Tuesday after announcing it has won several contracts "to design, develop and deliver simulators and other solutions for warfighter training supporting operations and maintenance of key aircraft and other platforms," worth $65 million in total.
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Image source: Getty Images.
The company said the contracts relate to "avionics maintenance training" for U.S. Army CH47F Chinook and UH-60M Blackhawk helicopters, Air Force UH-1 Huey "and more. "
The U.S. Department of War (i.e., the Department of Defense) is named as one counterparty, and unidentified "allied nations" are also involved. Kratos did not clarify precisely how many contracts it won, nor their duration, so we don't really know across how many years these $65 million will be spread.
And yet, this is crucial information that investors need to know to decide how material this contract is to their investment. Kratos recorded sales approaching $1.3 billion over the last 12 months after all. If the contracts awarded today total $65 million in fiscal 2026, for example, then that's a 5% increase in annual revenue for Kratos -- pretty significant.
On the other hand, if the contracts span five years, we're talking closer to a 1% boost in revenue, which would logically "move the needle" much less for Kratos. With Kratos stock moving only 2% higher today, investors appear to be hedging their bets to account for the uncertainty.
A bit more clarity from Kratos could go a long way to helping investors decide whether this stock is a "buy."
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Kratos Defense & Security Solutions. The Motley Fool has a disclosure policy.
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