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

As of 17 October 2025, the valuation grade for Kratos Defense & Security Solutions, Inc. has moved from expensive to attractive, indicating a shift in perception towards the stock's value. Given the current P/E ratio of 267, a Price to Book Value of 4.48, and an EV to EBITDA of 71.72, the company appears to be overvalued relative to its peers. For instance, AeroVironment, Inc. has a P/E of 180.12, while Leonardo DRS, Inc. shows a more reasonable P/E of 43.14, suggesting that Kratos may be priced higher than warranted based on earnings potential.
Despite the high valuation ratios, Kratos has demonstrated impressive stock performance, with a year-to-date return of 215.09% compared to the S&P 500's 13.30%, and a 1-year return of 229.58% against the S&P 500's 14.08%. This strong performance could indicate market optimism, but the significant valuation metrics suggest that the stock may be overvalued in the current market context.