Kratos Defense & Security Solutions (NASDAQ:KTOS) vs. TAT Technologies (NASDAQ:TATT) Critical Comparison

Kratos Defense & Security Solutions (NASDAQ:KTOS) and TAT Technologies (NASDAQ:TATT) are both aerospace companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, earnings, analyst recommendations, risk, valuation, dividends and institutional ownership.

Analyst Recommendations

This is a breakdown of recent recommendations for Kratos Defense & Security Solutions and TAT Technologies, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kratos Defense & Security Solutions	0	5	16	1	2.82
TAT Technologies	1	0	6	2	3.00

Kratos Defense & Security Solutions currently has a consensus target price of $98.28, indicating a potential upside of 38.44%. TAT Technologies has a consensus target price of $57.29, indicating a potential upside of 41.03%. Given TAT Technologies’ stronger consensus rating and higher probable upside, analysts clearly believe TAT Technologies is more favorable than Kratos Defense & Security Solutions.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Kratos Defense & Security Solutions	1.63%	3.34%	2.58%
TAT Technologies	9.45%	10.69%	8.06%

Risk & Volatility

Kratos Defense & Security Solutions has a beta of 1.22, meaning that its share price is 22% more volatile than the S&P 500. Comparatively, TAT Technologies has a beta of 1.11, meaning that its share price is 11% more volatile than the S&P 500.

Insider & Institutional Ownership

75.9% of Kratos Defense & Security Solutions shares are owned by institutional investors. Comparatively, 15.1% of TAT Technologies shares are owned by institutional investors. 1.5% of Kratos Defense & Security Solutions shares are owned by company insiders. Comparatively, 8.8% of TAT Technologies shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kratos Defense & Security Solutions	$1.35 billion	9.87	$22.00 million	$0.13	546.08
TAT Technologies	$178.01 million	2.96	$16.82 million	$1.37	29.65

Kratos Defense & Security Solutions has higher revenue and earnings than TAT Technologies. TAT Technologies 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.

Summary

TAT Technologies beats Kratos Defense & Security Solutions on 8 of the 15 factors compared between the two stocks.

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.

About TAT Technologies

TAT Technologies Ltd., together with its subsidiaries, provides solutions and services to the commercial and military aerospace, and ground defense industries in the United States, Israel, and internationally. The company operates through four segments: Original Equipment Manufacturing (OEM) of Heat Transfer Solutions and Aviation Accessories; Maintenance, Repair, and Overhaul (MRO) Services for Heat Transfer Components and OEM of Heat Transfer Solutions; MRO Services for Aviation Components; and Overhaul and Coating of Jet Engine Components. It designs, develops, and manufactures a range of heat transfer solutions, such as pre-cooler and oil/fuel hydraulic heat exchangers used in mechanical and electronic systems in commercial, military, and business aircraft; environmental control and power electronics cooling systems for use in aircraft and ground applications; and a range of other mechanical aircraft accessories and systems, such as pumps, valves, and turbine power units. The company provides MRO services for heat transfer components, as well as for manufacturing heat transfer solutions; and aviation components. In addition, it engages in the operation of a repair station, which provides heat transfer MRO services for airlines, air cargo carriers, maintenance service centers, and the military; and the overhaul and coating of jet engine components, including turbine vanes and blades, fan blades, variable inlet guide vanes, and afterburner flaps. The company was formerly known as Galagraph Ltd. and changed its name to TAT Technologies Ltd. in May 1992. TAT Technologies Ltd. was founded in 1969 and is headquartered in Netanya, Israel.