Kratos Defense & Security Solutions (NASDAQ: KTOS) and General Dynamics Corporation (NYSE:GD) are both aerospace companies, but which is the better stock? We will contrast the two companies based on the strength of their analyst recommendations, earnings, institutional ownership, dividends, risk, profitability and valuation.

Volatility & Risk

Kratos Defense & Security Solutions has a beta of 2.02, meaning that its stock price is 102% more volatile than the S&P 500. Comparatively, General Dynamics Corporation has a beta of 0.71, meaning that its stock price is 29% less volatile than the S&P 500.

Profitability

This table compares Kratos Defense & Security Solutions and General Dynamics Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Kratos Defense & Security Solutions -6.29% -1.40% -0.44%
General Dynamics Corporation 9.63% 28.17% 9.31%

Insider and Institutional Ownership

74.6% of Kratos Defense & Security Solutions shares are held by institutional investors. Comparatively, 87.5% of General Dynamics Corporation shares are held by institutional investors. 23.2% of Kratos Defense & Security Solutions shares are held by insiders. Comparatively, 6.7% of General Dynamics Corporation shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Kratos Defense & Security Solutions and General Dynamics Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Kratos Defense & Security Solutions $701.00 million 1.53 $20.10 million ($0.66) -18.71
General Dynamics Corporation $31.22 billion 1.90 $4.89 billion $9.72 20.36

General Dynamics Corporation has higher revenue and earnings than Kratos Defense & Security Solutions. Kratos Defense & Security Solutions is trading at a lower price-to-earnings ratio than General Dynamics Corporation, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Kratos Defense & Security Solutions and General Dynamics Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Kratos Defense & Security Solutions 0 2 4 0 2.67
General Dynamics Corporation 1 3 8 0 2.58

Kratos Defense & Security Solutions currently has a consensus price target of $12.54, suggesting a potential upside of 1.55%. General Dynamics Corporation has a consensus price target of $205.50, suggesting a potential upside of 3.85%. Given General Dynamics Corporation’s higher possible upside, analysts plainly believe General Dynamics Corporation is more favorable than Kratos Defense & Security Solutions.

Dividends

General Dynamics Corporation pays an annual dividend of $3.36 per share and has a dividend yield of 1.7%. Kratos Defense & Security Solutions does not pay a dividend. General Dynamics Corporation pays out 34.6% of its earnings in the form of a dividend. Kratos Defense & Security Solutions has increased its dividend for 19 consecutive years.

Summary

General Dynamics Corporation beats Kratos Defense & Security Solutions on 11 of the 16 factors compared between the two stocks.

Kratos Defense & Security Solutions Company Profile

Kratos Defense & Security Solutions, Inc. is a technology, intellectual property and proprietary product and solution company focused on the United States and its allies’ national security. The Kratos Government Solutions segment includes the operations of Defense Rocket Support Services, Microwave Electronics Division, Technical and Training Solutions, and Modular Systems, which provide technology-based defense solutions, involving products and services, with the focus relating to the nation’s Command, Control, Communications, Computing, Combat Systems, Intelligence, Surveillance and Reconnaissance requirements. The Unmanned Systems segment includes its unmanned aerial, ground, seaborne and command, control and communications system business. The Public Safety & Security segment provides integrated solutions for homeland security, public safety, critical infrastructure, and security and surveillance systems for government and commercial applications.

General Dynamics Corporation Company Profile

General Dynamics Corporation is a global aerospace and defense company. The Company offers a portfolio of products and services in business aviation; combat vehicles, weapons systems and munitions; information technology (IT) services and C4ISR (command, control, communications, computers, intelligence, surveillance and reconnaissance) solutions, and shipbuilding and ship repair. It operates through four business groups: Aerospace, Combat Systems, Information Systems and Technology, and Marine Systems. Its Aerospace group offers aircraft design; cockpit and cabin systems, and product service and support. Its Combat Systems group offers combat vehicles, weapons systems and munitions. The Information Systems and Technology group provides technologies, products and services in support of various programs. The Marine Systems group is a designer and builder of nuclear-powered submarines, surface combatants and auxiliary and combat-logistics ships.

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