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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.

(click to enlarge)

Insider buying during the last 30 days

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

NameTitleTrade DateShares PurchasedCurrent OwnershipIncrease In Shares
Eric DemarcoCEODec 231,273326,468 shares+10.6%
Deanna LundCFODec 24,50052,609 shares+9.4%
Jane JuddDirectorNov 274,18020,180 shares+26.1%
Thomas MillsPresident, Modular SystemsNov 274,25044,626 shares+10.5%

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.

MonthInsider buying / sharesInsider selling / shares
December 201335,7730
November 20138,4300
October 201300
September 201300
August 201300
July 201300
June 201300
May 201328,6470
April 201300
March 201371,9130
February 201300
January 201300

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

Outlook

Kratos' guidance is as follows:

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

Competition

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

CompanyKTOSCACICSCIndustry Average (Security & Protection Services)
Market Cap:386.22M1.69B7.75B556.44M
Employees:4,30014,90090,0004.40K
Qtrly Rev Growth (yoy):-0.18-0.07-0.100.00
Revenue:978.50M3.62B14.28B551.73M
Gross Margin:0.250.310.230.31
EBITDA:84.10M320.23M2.14B61.79M
Operating Margin:0.030.070.080.06
Net Income:-116.10M148.97M652.00MN/A
EPS:-2.126.187.510.44
P/E:N/A11.677.0144.57
PEG (5 yr expected):1.220.981.802.00
P/S:0.370.470.541.01

Kratos has the lowest P/S ratio among these three companies.

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

CompanyInsider buying / sharesInsider selling / shares
CACI0112,038
CSC057,235

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.

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