KTOS vs. ESLT: Which Defense Tech Stock Is a Better Buy Today?

Kratos Defense & Security Solutions, Inc. KTOS and Elbit Systems ESLT share a strong strategic commonality as modern defense technology providers. Both companies focus on developing advanced military systems rather than traditional large-scale platforms like fighter jets or naval vessels. Their core capabilities lie in high-tech, mission-critical areas, such as unmanned systems, electronic warfare, surveillance, and communications.

Agile, technology-driven solutions that improve situational awareness, precise targeting, and operational efficiency are becoming more popular among governments. Both Kratos Defense and Elbit Systems are well positioned in this transition, offering cost-effective, scalable technologies like tactical drones, autonomous systems, and electronic warfare tools that can be rapidly deployed and upgraded.

As geopolitical tensions persist, countries are accelerating investments in next-generation defense capabilities. This trend directly benefits both companies, as their products address urgent needs like border surveillance, anti-drone systems and battlefield connectivity.

Let's compare the stocks' fundamentals to determine which one is a better investment option at present.

Factors Acting in Favor of KTOS Stock

Kratos Defense is the primary unmanned aerial target drone system provider for the U.S. Air Force, Navy, Army and several allied defense agencies, which has led to multiple recent contracts and partnerships that are expanding its presence in the global UAS market. In March 2026, the company received an approximately $7 million contract for a Counter-UAS System designed to detect, track and classify threats, including low-profile unmanned aerial systems, cruise missiles and other aerial systems.

Apart from manufacturing unmanned aerial drone systems, Kratos also focuses on expanding its product portfolio with other products, especially in hypersonics. The company currently holds orders for multiple Erinyes and DarkFury hypersonic vehicles for upcoming and expected hypersonic missions. Such a diverse product portfolio ushers in solid order flows for the company, which, in turn, resulted in a solid backlog worth $1.57 billion for Kratos Defense at the end of the fourth quarter of 2025. This implies solid revenue generation prospects for the company.

Factors Acting in Favor of ESLT Stock

Elbit Systems is seeing strong momentum in its unmanned systems business, driven by rising demand from global defense and security agencies. Its portfolio spans a broad range of unmanned technologies, including mini-UAS for tactical use, MALE-class drones for extended missions and unmanned naval platforms. The company also produces unmanned ground vehicles and surface vessels for various operational needs, from surveillance and reconnaissance to border protection and combat support.

In the fourth quarter of 2025, C4I and Cyber revenues increased 19% due to sales of radio systems and command and control systems in Europe and Israel. ISTAR and EW revenues increased 39% due to increased sales of Maritime systems, Electro-Optic systems and C-UAS Electronic Warfare. In February 2026, Elbit Systems was awarded several contracts with a total value of nearly $435 million from an international customer. Under these contracts, the company will supply a range of advanced systems, including land systems, and undertake a development program for an innovative defense solution.

How Do Zacks Estimates Compare for KTOS & ESLT?

The Zacks Consensus Estimate for Kratos Defense’s 2026 and 2027 earnings per share (EPS) indicates an increase of 40% and 39.83%, respectively, year over year.

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The Zacks Consensus Estimate for Elbit Systems’ EPS indicates an increase of 14.27% and 19.1% in 2026 and 2027, respectively, year over year.

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ESLT’s Valuation More Attractive Than KTOS

KTOS shares trade at a forward 12-month Price/Sales (P/S F12M) of 8.94X compared with ESLT’s 4.47X, making ESLT relatively more attractive from a valuation standpoint.

Debt Position of KTOS & ESLT

Currently, KTOS’s total debt-to-capital ratio is zero, whereas ESLT’s is 7.59%.

The time-to-interest earned ratio for Kratos Defense at the end of fourth quarter of 2025 was negative, while that for Elbit Systems was 5.1. The ratio, being greater than one, reflects the company’s ability to meet future interest obligations without difficulties.

KTOS & ESLT’s Price Performance

In the past three months, shares of Kratos Defense and Elbit Systems have risen 4.7% and 55.1%, respectively.

KTOS or ESLT: Which Is a Better Choice Now?

Kratos Defense is benefiting from its position as a leading supplier of unmanned aerial target drones to U.S. and allied forces, supported by a solid backlog, new contract wins, and an expanding global drone footprint. Meanwhile, Elbit Systems is experiencing robust growth in its unmanned systems segment, driven by rising global demand across air, land, and naval platforms for surveillance, combat, and security operations. This momentum is reflected in strong revenue gains and continued contract wins, reinforcing its growth outlook.

Our choice at the moment is Elbit Systems, given its better price performance and valuation than Kratos Defense. ESLT holds a Zacks Rank #2 (Buy) and KTOS carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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