Is Kratos Defense & Security Solutions, Inc. overvalued or undervalued?

As of 10 June 2025, the valuation grade for Kratos Defense & Security Solutions, Inc. has moved from very attractive to fair. The company appears to be overvalued based on its current metrics. The P/E ratio stands at 267, significantly higher than the industry average, while the EV to EBITDA ratio is 71.72, indicating a premium valuation compared to peers. Additionally, the ROCE is a mere 2.48%, and the ROE is only 1.67%, suggesting inefficiencies in generating returns.
In comparison with peers, Kratos has a P/E ratio of 285.70, while OSI Systems, Inc. has a P/E of 25.00, highlighting a stark contrast in valuation. AeroVironment, Inc. is also notably expensive with a P/E of 259.58. Despite Kratos showing strong stock performance against the S&P 500 over various time frames, the current valuation metrics suggest it is overvalued relative to its peers and industry standards.