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

As of 7 August 2025, the valuation grade for Kratos Defense & Security Solutions, Inc. has moved from very attractive to attractive. Based on the current metrics, the company appears to be overvalued. The P/E ratio stands at 267, significantly higher than its peers such as Leonardo DRS, Inc. with a P/E of 43.14 and Crane Co. at 35.01. Additionally, the EV to EBITDA ratio is 71.72, which is also elevated compared to the industry averages.
In comparison to its peers, Kratos is positioned unfavorably with a PEG ratio of 2.98, indicating that its growth prospects may not justify its high valuation. The return performance of the stock has been impressive, with a year-to-date return of 205.72% compared to the S&P 500's 12.22%, and a 1-year return of 244.51% against the S&P 500's 17.14%. This strong performance may attract investor interest, but the high valuation ratios suggest caution moving forward.