Rotten Tomato Stocks
No Result
View All Result
  • News
    Japan Games Maker Nintendo’s Profit Slips Amid Chips Crunch

    Japan Games Maker Nintendo’s Profit Slips Amid Chips Crunch

    Dow drops nearly 100 points on losses for Intel, Nike stocks

    Dow drops nearly 100 points on losses for Intel, Nike stocks

    Spanish Court: Amazon Violated Labor Law With Delivery App

    Spanish Court: Amazon Violated Labor Law With Delivery App

    Alphabet Posts Lower Q4 Profit Amid Ad Squeeze, Competition

    Alphabet Posts Lower Q4 Profit Amid Ad Squeeze, Competition

  • NYSE
    Chipotle stock falls after ‘tightening’ consumer spending leads to second earnings miss in 5 years

    Chipotle stock falls after ‘tightening’ consumer spending leads to second earnings miss in 5 years

    Duke Energy Corp. stock falls Tuesday, underperforms market

    Duke Energy Corp. stock falls Tuesday, underperforms market

    EnPro Industries, Inc. (NYSE:NPO) Stock Holdings Lowered by Congress Asset Management Co. MA

    EnPro Industries, Inc. (NYSE:NPO) Stock Holdings Lowered by Congress Asset Management Co. MA

    Holley Shares Fall 8.2% After Hours As CEO Retires, Preliminary 4Q Sales Decline

    Holley Shares Fall 8.2% After Hours As CEO Retires, Preliminary 4Q Sales Decline

  • NASDAQ
    Crocs (NASDAQ:CROX) Seems To Use Debt Quite Sensibly

    Crocs (NASDAQ:CROX) Seems To Use Debt Quite Sensibly

    Novavax Inc. stock falls Tuesday, underperforms market

    Novavax Inc. stock falls Tuesday, underperforms market

    El Pollo Loco (NASDAQ:LOCO) Stock Rating Lowered by StockNews.com

    El Pollo Loco (NASDAQ:LOCO) Stock Rating Lowered by StockNews.com

    ZoomInfo Posts 4Q Results, Shares Decline Almost 6% After Hours

    ZoomInfo Posts 4Q Results, Shares Decline Almost 6% After Hours

  • OTC
    China Eastern Airlines 3Q Loss Widens on Low Travel Demand

    China Eastern Airlines 3Q Loss Widens on Low Travel Demand

    Corus Entertainment 4Q Profit Falls

    Corus Entertainment 4Q Profit Falls

    Nintendo Co. Ltd. ADR falls Monday, still outperforms market

    Nintendo Co. Ltd. ADR falls Monday, still outperforms market

    Ocado Group PLC Revenue of Ocado Retail in Q3 Fell 10.6%

    Ocado Group PLC Revenue of Ocado Retail in Q3 Fell 10.6%

  • TSX
    US Seeks to Fine Air Canada $25.5 Million Over Slow Refunds

    US Seeks to Fine Air Canada $25.5 Million Over Slow Refunds

    S&P/TSX composite falls on drop in materials sector, loonie tops 81 cents US

    S&P/TSX composite falls on drop in materials sector, loonie tops 81 cents US

    Bitcoin Is Falling: Should You Buy the Dip?

    Bitcoin Is Falling: Should You Buy the Dip?

    CN Rail Stock Is So Undervalued That it’s Absurd

    CN Rail Stock Is So Undervalued That it’s Absurd

  • News
    Japan Games Maker Nintendo’s Profit Slips Amid Chips Crunch

    Japan Games Maker Nintendo’s Profit Slips Amid Chips Crunch

    Dow drops nearly 100 points on losses for Intel, Nike stocks

    Dow drops nearly 100 points on losses for Intel, Nike stocks

    Spanish Court: Amazon Violated Labor Law With Delivery App

    Spanish Court: Amazon Violated Labor Law With Delivery App

    Alphabet Posts Lower Q4 Profit Amid Ad Squeeze, Competition

    Alphabet Posts Lower Q4 Profit Amid Ad Squeeze, Competition

  • NYSE
    Chipotle stock falls after ‘tightening’ consumer spending leads to second earnings miss in 5 years

    Chipotle stock falls after ‘tightening’ consumer spending leads to second earnings miss in 5 years

    Duke Energy Corp. stock falls Tuesday, underperforms market

    Duke Energy Corp. stock falls Tuesday, underperforms market

    EnPro Industries, Inc. (NYSE:NPO) Stock Holdings Lowered by Congress Asset Management Co. MA

    EnPro Industries, Inc. (NYSE:NPO) Stock Holdings Lowered by Congress Asset Management Co. MA

    Holley Shares Fall 8.2% After Hours As CEO Retires, Preliminary 4Q Sales Decline

    Holley Shares Fall 8.2% After Hours As CEO Retires, Preliminary 4Q Sales Decline

  • NASDAQ
    Crocs (NASDAQ:CROX) Seems To Use Debt Quite Sensibly

    Crocs (NASDAQ:CROX) Seems To Use Debt Quite Sensibly

    Novavax Inc. stock falls Tuesday, underperforms market

    Novavax Inc. stock falls Tuesday, underperforms market

    El Pollo Loco (NASDAQ:LOCO) Stock Rating Lowered by StockNews.com

    El Pollo Loco (NASDAQ:LOCO) Stock Rating Lowered by StockNews.com

    ZoomInfo Posts 4Q Results, Shares Decline Almost 6% After Hours

    ZoomInfo Posts 4Q Results, Shares Decline Almost 6% After Hours

  • OTC
    China Eastern Airlines 3Q Loss Widens on Low Travel Demand

    China Eastern Airlines 3Q Loss Widens on Low Travel Demand

    Corus Entertainment 4Q Profit Falls

    Corus Entertainment 4Q Profit Falls

    Nintendo Co. Ltd. ADR falls Monday, still outperforms market

    Nintendo Co. Ltd. ADR falls Monday, still outperforms market

    Ocado Group PLC Revenue of Ocado Retail in Q3 Fell 10.6%

    Ocado Group PLC Revenue of Ocado Retail in Q3 Fell 10.6%

  • TSX
    US Seeks to Fine Air Canada $25.5 Million Over Slow Refunds

    US Seeks to Fine Air Canada $25.5 Million Over Slow Refunds

    S&P/TSX composite falls on drop in materials sector, loonie tops 81 cents US

    S&P/TSX composite falls on drop in materials sector, loonie tops 81 cents US

    Bitcoin Is Falling: Should You Buy the Dip?

    Bitcoin Is Falling: Should You Buy the Dip?

    CN Rail Stock Is So Undervalued That it’s Absurd

    CN Rail Stock Is So Undervalued That it’s Absurd

No Result
View All Result
Rotten Tomato Stocks
No Result
View All Result

Is Kratos Defense & Security Solutions (NASDAQ:KTOS) Using Too Much Debt?

Editorial Staff by Editorial Staff
January 5, 2022
0
Is Kratos Defense & Security Solutions (NASDAQ:KTOS) Using Too Much Debt?

David Iben put it well when he said, ‘Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.’ So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. We note that Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) does have debt on its balance sheet. But should shareholders be worried about its use of debt?

When Is Debt A Problem?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. Ultimately, if the company can’t fulfill its legal obligations to repay debt, shareholders could walk away with nothing. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. The first step when considering a company’s debt levels is to consider its cash and debt together.

What Is Kratos Defense & Security Solutions’s Debt?

The chart below, which you can click on for greater detail, shows that Kratos Defense & Security Solutions had US$296.5m in debt in September 2021; about the same as the year before. However, its balance sheet shows it holds US$369.9m in cash, so it actually has US$73.4m net cash.

debt-equity-history-analysis
NasdaqGS:KTOS Debt to Equity History January 3rd 2022

How Strong Is Kratos Defense & Security Solutions’ Balance Sheet?

We can see from the most recent balance sheet that Kratos Defense & Security Solutions had liabilities of US$210.6m falling due within a year, and liabilities of US$410.3m due beyond that. On the other hand, it had cash of US$369.9m and US$274.7m worth of receivables due within a year. So it actually has US$23.7m more liquid assets than total liabilities.

This state of affairs indicates that Kratos Defense & Security Solutions’ balance sheet looks quite solid, as its total liabilities are just about equal to its liquid assets. So while it’s hard to imagine that the US$2.41b company is struggling for cash, we still think it’s worth monitoring its balance sheet. Succinctly put, Kratos Defense & Security Solutions boasts net cash, so it’s fair to say it does not have a heavy debt load!

The bad news is that Kratos Defense & Security Solutions saw its EBIT decline by 11% over the last year. If earnings continue to decline at that rate then handling the debt will be more difficult than taking three children under 5 to a fancy pants restaurant. When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine Kratos Defense & Security Solutions’s ability to maintain a healthy balance sheet going forward.

Finally, a business needs free cash flow to pay off debt; accounting profits just don’t cut it. While Kratos Defense & Security Solutions has net cash on its balance sheet, it’s still worth taking a look at its ability to convert earnings before interest and tax (EBIT) to free cash flow, to help us understand how quickly it is building (or eroding) that cash balance. In the last three years, Kratos Defense & Security Solutions created free cash flow amounting to 11% of its EBIT, an uninspiring performance. For us, cash conversion that low sparks a little paranoia about is ability to extinguish debt.

Summing up

While it is always sensible to investigate a company’s debt, in this case Kratos Defense & Security Solutions has US$73.4m in net cash and a decent-looking balance sheet. So although we see some areas for improvement, we’re not too worried about Kratos Defense & Security Solutions’s balance sheet. When analysing debt levels, the balance sheet is the obvious place to start. 

Related Posts

Crocs (NASDAQ:CROX) Seems To Use Debt Quite Sensibly
NASDAQ

Crocs (NASDAQ:CROX) Seems To Use Debt Quite Sensibly

February 7, 2023
Novavax Inc. stock falls Tuesday, underperforms market
NASDAQ

Novavax Inc. stock falls Tuesday, underperforms market

February 7, 2023
El Pollo Loco (NASDAQ:LOCO) Stock Rating Lowered by StockNews.com
NASDAQ

El Pollo Loco (NASDAQ:LOCO) Stock Rating Lowered by StockNews.com

February 7, 2023
ZoomInfo Posts 4Q Results, Shares Decline Almost 6% After Hours
NASDAQ

ZoomInfo Posts 4Q Results, Shares Decline Almost 6% After Hours

February 6, 2023
Load More
Next Post
Here’s Why Global Ship Lease (NYSE:GSL) Has A Meaningful Debt Burden

Here's Why Global Ship Lease (NYSE:GSL) Has A Meaningful Debt Burden

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

I agree to the Terms & Conditions and Privacy Policy.

POPULAR NEWS

CNH Industrial (NYSE:CNHI) Use Of Debt Could Be Considered Risky

CNH Industrial (NYSE:CNHI) Use Of Debt Could Be Considered Risky

April 14, 2021
CN Rail Stock Is So Undervalued That it’s Absurd

CN Rail Stock Is So Undervalued That it’s Absurd

May 2, 2021
Ocado Group PLC Revenue of Ocado Retail in Q3 Fell 10.6%

Ocado Group PLC Revenue of Ocado Retail in Q3 Fell 10.6%

September 14, 2021
US Seeks to Fine Air Canada $25.5 Million Over Slow Refunds

US Seeks to Fine Air Canada $25.5 Million Over Slow Refunds

June 17, 2021
10 Warning Signs That Should Tell You “This Stock is in Trouble”

10 Warning Signs That Should Tell You “This Stock is in Trouble”

November 11, 2019

EDITOR'S PICK

Nikola Corp. stock falls Friday, underperforms market

Nikola Corp. stock falls Friday, underperforms market

October 2, 2021
Is Callon Petroleum (NYSE:CPE) Using Debt In A Risky Way?

Is Callon Petroleum (NYSE:CPE) Using Debt In A Risky Way?

June 1, 2021
Telenet Group (OTCMKTS:TLGHF) Stock Price Down 16%

Telenet Group (OTCMKTS:TLGHF) Stock Price Down 16%

March 26, 2020
These 4 Measures Indicate That AMERCO (NASDAQ:UHAL) Is Using Debt Extensively

These 4 Measures Indicate That AMERCO (NASDAQ:UHAL) Is Using Debt Extensively

May 13, 2021

Stay Updated

Get breaking news delivered straight into your inbox

Nothing in this publication should be considered as personalized financial advice. We are not licensed under securities laws to address your particular financial situation. No communication by our employees to you should be deemed as personalized financial advice. Please consult a licensed financial advisor before making any investment decision. This is a paid advertisement and is neither an offer nor recommendation to buy or sell any security. We hold no investment licenses and are thus neither licensed nor qualified to provide investment advice. The content in this report or email is not provided to any individual with a view toward their individual circumstances. Rotten Tomato stocks is a wholly-owned subsidiary of Grainne Capital Limited.
While all information is believed to be reliable, it is not guaranteed by us to be accurate. Individuals should assume that all information contained in our newsletter is not trustworthy unless verified by their own independent research. Also, because events and circumstances frequently do not occur as expected, there will likely be differences between the any predictions and actual results. Always consult a licensed investment professional before making any investment decision. Be extremely careful, investing in securities carries a high degree of risk; you may likely lose some or all of the investment.

Rotten Tomato Stocks cover the companies and markets that are declining, failing or headed for disaster. We help investors spot the down tends and recognize when something smells rotten.

RECENT POSTS

Japan Games Maker Nintendo’s Profit Slips Amid Chips Crunch

Chipotle stock falls after ‘tightening’ consumer spending leads to second earnings miss in 5 years

Duke Energy Corp. stock falls Tuesday, underperforms market

POPULAR POSTS

EnPro Industries, Inc. (NYSE:NPO) Stock Holdings Lowered by Congress Asset Management Co. MA

Crocs (NASDAQ:CROX) Seems To Use Debt Quite Sensibly

Novavax Inc. stock falls Tuesday, underperforms market

© Copyright 2023 RottenTomatoStocks. All Rights Reserved 

Disclaimer | Privacy Policy

No Result
View All Result
  • HOME
  • NEWS
  • NYSE
  • NASDAQ
  • OTC
  • TSX

© 2021 RottenTomatoStocks.com

error: Content is protected !!
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.