Kratos Defense & Security (KTOS 5.06%) stock fell 4.4% through 11:55 a.m. ET Thursday — and it’s no mystery why.
President Trump announced yesterday that the U.S. and Iran have signed an “interim agreement” to end their conflict. While it’s hard to answer the age-old question “war, huh, what is it good for?” investors today seem to think ending the Iran war is bad news for Kratos stock.
Image source: Kratos Defense & Security.
Details on the agreement
Details are in flux, and the interim agreement mainly kicks off 60 days of more intense negotiations surrounding the status of the Strait of Hormuz and the fate of Iran’s nuclear weapons program. Still, the broad outlines today look like this:
- The U.S. naval blockade on Iran will end.
- Iran may resume foreign sales of oil.
- Other countries’ ships have 60 days’ free passage through the Strait of Hormuz.
- S. sanctions on Iran will lift.
- Previously frozen Iranian bank accounts will unfreeze.
- And Iran will set up a $300 billion reconstruction fund.
Not much of this is immediately relevant to Kratos stock, but knowing the details is important for context, so investors can gauge the chances that both sides will believe they’re getting enough out of this peace deal for it to hold together.
Kratos Defense & Security Solutions
Today’s Change
(-5.06%) $-2.84
Current Price
$53.32
Key Data Points
Market Cap
$11B
Day’s Range
$53.13 – $56.61
52wk Range
$39.00 – $134.00
Volume
65.9K
Avg Vol
4.2M
Gross Margin
21.95%
What this means for Kratos Defense stock
So, how is the peace deal relevant to Kratos? Well, if peace holds and fighting doesn’t resume, this might depress demand for new drones from Kratos. Kratos primarily focuses on producing target-practice drones, however, and also an advanced “loyal wingman” drone called the XQ-58A Valkyrie that isn’t reported to have been used in the Iran conflict at all.
Since Kratos presumably made no sales when the war was “on,” I wouldn’t expect it to suffer any falloff in sales now that the war is “off” either.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Kratos Defense & Security Solutions. The Motley Fool has a disclosure policy.
