Critical Survey: Kratos Defense & Security Solutions (NASDAQ:KTOS) vs. AEVEX (NYSE:AVEX)

AEVEX (NYSE:AVEX) and Kratos Defense & Security Solutions (NASDAQ:KTOS) are both industrials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, risk, dividends, analyst recommendations, profitability, earnings and valuation.

Valuation & Earnings

This table compares AEVEX and Kratos Defense & Security Solutions”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AEVEX	$697.02 million	2.50	$36.49 million	$0.32	47.81
Kratos Defense & Security Solutions	$1.35 billion	5.63	$22.00 million	$0.17	237.76

AEVEX has higher earnings, but lower revenue than Kratos Defense & Security Solutions. AEVEX is trading at a lower price-to-earnings ratio than Kratos Defense & Security Solutions, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for AEVEX and Kratos Defense & Security Solutions, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AEVEX	1	2	9	0	2.67
Kratos Defense & Security Solutions	1	1	20	2	2.96

AEVEX currently has a consensus target price of $32.56, suggesting a potential upside of 112.78%. Kratos Defense & Security Solutions has a consensus target price of $94.16, suggesting a potential upside of 132.95%. Given Kratos Defense & Security Solutions’ stronger consensus rating and higher possible upside, analysts plainly believe Kratos Defense & Security Solutions is more favorable than AEVEX.

Institutional & Insider Ownership

75.9% of Kratos Defense & Security Solutions shares are held by institutional investors. 1.5% of Kratos Defense & Security Solutions shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares AEVEX and Kratos Defense & Security Solutions’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AEVEX	N/A	N/A	N/A
Kratos Defense & Security Solutions	2.03%	3.07%	2.55%

Summary

Kratos Defense & Security Solutions beats AEVEX on 12 of the 14 factors compared between the two stocks.

About AEVEX

AEVEX Corp. is a holding company which designs, manufactures and provides autonomous systems and navigation technologies. The company’s operating segment includes tactical systems and global solutions. AEVEX Corp. is based in Solana Beach, California.

About Kratos Defense & Security Solutions

Kratos Defense & Security Solutions, Inc. engages in the provision of mission critical products, services and solutions for United States national security priorities. It operates through the Kratos Government Solutions (KGS) and Unmanned Systems (US) segments. The KGS segment consists of an aggregation of KGS operating segments, including microwave electronic products, space, satellite and cyber, training solutions. The US segment refers to the unmanned aerial, unmanned ground, unmanned seaborne and related command, control and communications system businesses. The company was founded on December 19, 1994, and is headquartered in Round Rock, TX.