Kratos Defense & Security Solutions: 4 Different Insiders Have Purchased Shares Since November 27

| About: Kratos Defense (KTOS)

In this article, I will feature one services sector stock that has seen intensive insider buying during the last 30 days. Intensive insider buying can be defined by the following three criteria:

  1. The stock is purchased by three or more insiders within one month.
  2. The stock is sold by no insiders in the month of intensive purchasing.
  3. At least two purchasers increased their holdings by more than 10%.

Kratos Defense & Security Solutions (NASDAQ:KTOS) provides mission critical products, services, and solutions in the United States and internationally.

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Insider buying during the last 30 days

Here is a table of Kratos' insider-trading activity during the last 30 days by insider.

Name Title Trade Date Shares Purchased Current Ownership Increase In Shares
Eric Demarco CEO Dec 2 31,273 326,468 shares +10.6%
Deanna Lund CFO Dec 2 4,500 52,609 shares +9.4%
Jane Judd Director Nov 27 4,180 20,180 shares +26.1%
Thomas Mills President, Modular Systems Nov 27 4,250 44,626 shares +10.5%
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There have been 44,203 shares purchased by insiders during the last 30 days.

Insider buying by calendar month

Here is a table of Kratos' insider-trading activity by calendar month.

Month Insider buying / shares Insider selling / shares
December 2013 35,773 0
November 2013 8,430 0
October 2013 0 0
September 2013 0 0
August 2013 0 0
July 2013 0 0
June 2013 0 0
May 2013 28,647 0
April 2013 0 0
March 2013 71,913 0
February 2013 0 0
January 2013 0 0
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There have been 144,763 shares purchased and there have been zero shares sold by insiders this year.

Financials

Kratos reported the third-quarter financial results on November 7 with the following highlights:

Revenue $226.4 million
Net loss $9.9 million
Cash $49.8 million
Debt $644.6 million
Backlog $1.1 billion
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Outlook

Kratos' guidance is as follows:

Q4/2013 FY/2013
Revenue $240-$260 million $955-$975 million
Adjusted EBITDA $26-$30 million $102-$106 million
Adjusted free cash flow N/A $5-$15 million
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Competition

Kratos' competitors include CACI International (NYSE:CACI) and Computer Sciences Corporation (NYSE:CSC). Here is a table comparing these companies.

Company KTOS CACI CSC Industry Average (Security & Protection Services)
Market Cap: 386.22M 1.69B 7.75B 556.44M
Employees: 4,300 14,900 90,000 4.40K
Qtrly Rev Growth (yoy): -0.18 -0.07 -0.10 0.00
Revenue: 978.50M 3.62B 14.28B 551.73M
Gross Margin: 0.25 0.31 0.23 0.31
EBITDA: 84.10M 320.23M 2.14B 61.79M
Operating Margin: 0.03 0.07 0.08 0.06
Net Income: -116.10M 148.97M 652.00M N/A
EPS: -2.12 6.18 7.51 0.44
P/E: N/A 11.67 7.01 44.57
PEG (5 yr expected): 1.22 0.98 1.80 2.00
P/S: 0.37 0.47 0.54 1.01
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Kratos has the lowest P/S ratio among these three companies.

Here is a table of these competitors' insider-trading activities this year.

Company Insider buying / shares Insider selling / shares
CACI 0 112,038
CSC 0 57,235
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Only Kratos has seen intensive insider buying during the last 30 days.

Conclusion

There have been four different insiders buying Kratos and there have not been any insiders selling Kratos during the last 30 days. Three of these four insiders increased their holdings by more than 10%. Kratos has an insider ownership of 0.20%.

There are four analyst buy ratings, one neutral rating, and zero sell ratings with an average price target of $9.88. Kratos is trading at a forward P/E ratio 12.77 and the company has a book value of $5.28 per share. The stock is currently trading right at its 200-day moving average, which could be a good entry point for the stock based on the intensive insider buying.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in KTOS over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.