Kratos Defense & Security Solutions (NASDAQ: KTOS) and Cubic (NYSE:CUB) are both small-cap aerospace companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, profitability, analyst recommendations, institutional ownership, dividends, valuation and risk.
Volatility & Risk
Kratos Defense & Security Solutions has a beta of 1.8, meaning that its stock price is 80% more volatile than the S&P 500. Comparatively, Cubic has a beta of 1.1, meaning that its stock price is 10% more volatile than the S&P 500.
This table compares Kratos Defense & Security Solutions and Cubic’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Kratos Defense & Security Solutions||$668.70 million||1.70||-$60.50 million||($0.32)||-34.34|
|Cubic||$1.49 billion||1.09||-$11.20 million||($0.41)||-144.76|
Cubic has higher revenue and earnings than Kratos Defense & Security Solutions. Cubic is trading at a lower price-to-earnings ratio than Kratos Defense & Security Solutions, indicating that it is currently the more affordable of the two stocks.
This table compares Kratos Defense & Security Solutions and Cubic’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Kratos Defense & Security Solutions||-3.39%||-1.21%||-0.45%|
This is a summary of current ratings and recommmendations for Kratos Defense & Security Solutions and Cubic, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Kratos Defense & Security Solutions||0||4||5||0||2.56|
Kratos Defense & Security Solutions currently has a consensus price target of $13.06, indicating a potential upside of 18.79%. Cubic has a consensus price target of $60.17, indicating a potential upside of 1.38%. Given Kratos Defense & Security Solutions’ higher possible upside, equities analysts clearly believe Kratos Defense & Security Solutions is more favorable than Cubic.
Cubic pays an annual dividend of $0.27 per share and has a dividend yield of 0.5%. Kratos Defense & Security Solutions does not pay a dividend. Cubic pays out -65.9% of its earnings in the form of a dividend.
Insider and Institutional Ownership
71.4% of Kratos Defense & Security Solutions shares are held by institutional investors. Comparatively, 90.6% of Cubic shares are held by institutional investors. 17.9% of Kratos Defense & Security Solutions shares are held by insiders. Comparatively, 7.9% of Cubic shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
About Kratos Defense & Security Solutions
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.
Cubic Corporation (Cubic) designs, integrates and operates systems, products and services that provide situational awareness for its customers in the transportation and defense industries. The Company operates in three business segments across the global transportation and defense markets, which include Cubic Transportation Systems (CTS), Cubic Global Defense (CGD) and Cubic Global Defense Services (CGD Services). The Company’s CTS segment is a systems integrator of payment and information technology and services for travel solutions. The Company’s CGD Systems is focused on two primary lines of business: training systems and secure communications (SC) products. The Company’s CGD Services segment is a provider of training, operations, intelligence, maintenance, technical and other support services to the United States government and its agencies and allied nations. It also provides cross-domain hardware solutions to address multi-level security challenges across common networks.
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