Analyzing Kratos Defense & Security Solutions (NASDAQ:KTOS) & Carpenter Technology (NYSE:CRS)

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

Volatility & Risk

Carpenter Technology has a beta of 1.26, meaning that its stock price is 26% more volatile than the S&P 500. Comparatively, Kratos Defense & Security Solutions has a beta of 1.11, meaning that its stock price is 11% more volatile than the S&P 500.

Valuation & Earnings

This table compares Carpenter Technology 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
Carpenter Technology	$3.12 billion	6.47	$529.80 million	$10.52	38.77
Kratos Defense & Security Solutions	$1.35 billion	6.62	$22.00 million	$0.17	279.18

Carpenter Technology has higher revenue and earnings than Kratos Defense & Security Solutions. Carpenter Technology 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.

Insider and Institutional Ownership

92.0% of Carpenter Technology shares are held by institutional investors. Comparatively, 75.9% of Kratos Defense & Security Solutions shares are held by institutional investors. 2.9% of Carpenter Technology shares are held by company insiders. Comparatively, 1.5% of Kratos Defense & Security Solutions shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Carpenter Technology	16.96%	26.46%	15.02%
Kratos Defense & Security Solutions	2.03%	3.07%	2.55%

Analyst Ratings

This is a breakdown of recent ratings and target prices for Carpenter Technology and Kratos Defense & Security Solutions, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Carpenter Technology	0	2	8	0	2.80
Kratos Defense & Security Solutions	1	2	18	2	2.91

Carpenter Technology currently has a consensus target price of $577.25, suggesting a potential upside of 41.53%. Kratos Defense & Security Solutions has a consensus target price of $98.06, suggesting a potential upside of 106.61%. Given Kratos Defense & Security Solutions’ stronger consensus rating and higher probable upside, analysts clearly believe Kratos Defense & Security Solutions is more favorable than Carpenter Technology.

Summary

Carpenter Technology beats Kratos Defense & Security Solutions on 9 of the 15 factors compared between the two stocks.

About Carpenter Technology

Carpenter Technology Corporation engages in the manufacture, fabrication, and distribution of specialty metals in the United States, Europe, the Asia Pacific, Mexico, Canada, and internationally. It operates in two segments, Specialty Alloys Operations and Performance Engineered Products. The company offers specialty alloys, including titanium alloys, powder metals, stainless steels, alloy steels, and tool steels, as well as additives, and metal powders and parts. It serves to aerospace, defense, medical, transportation, energy, industrial, and consumer markets. The company was founded in 1889 and is headquartered in Philadelphia, Pennsylvania.

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.