Kratos Defense Stock Surges on Earnings Beat Despite Mixed Results

Kratos Defense & Security Solutions saw its shares jump 9.4% after reporting stronger-than-expected Q2 earnings. The defense contractor posted $0.11 per share in adjusted profits on $351.5 million in revenue, surpassing analyst estimates of $0.09 per share and $305.8 million.

While organic growth reached 15%, concerns emerged with a weak 0.7 book-to-bill ratio and $31.1 million in negative free cash flow. GAAP earnings fell sharply to just $0.02 per share, highlighting the gap between adjusted and actual profitability.

The company's Q3 revenue guidance of $315-$325 million fell short of expectations, though full-year projections remain slightly above consensus at $1.3 billion. Market reaction suggests investors are rewarding the immediate beat while discounting future uncertainties.