Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS), is not the largest company out there, but it led the NASDAQGS gainers with a relatively large price hike in the past couple of weeks. The company is inching closer to its yearly highs following the recent share price climb. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock's share price. However, could the stock still be trading at a relatively cheap price? Today we will analyse the most recent data on Kratos Defense & Security Solutions's outlook and valuation to see if the opportunity still exists.

What Is Kratos Defense & Security Solutions Worth?

According to our valuation model, the stock is currently overvalued by about 32%, trading at US$26.63 compared to our intrinsic value of $20.17. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Since Kratos Defense & Security Solutions's share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What does the future of Kratos Defense & Security Solutions look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let's also take a look at the company's future expectations. With profit expected to more than double over the next couple of years, the future seems bright for Kratos Defense & Security Solutions. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? KTOS's optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe KTOS should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you've been keeping an eye on KTOS for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there's no upside from mispricing. However, the optimistic prospect is encouraging for KTOS, which means it's worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into Kratos Defense & Security Solutions, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 1 warning sign for Kratos Defense & Security Solutions you should know about.

If you are no longer interested in Kratos Defense & Security Solutions, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.