Why Kratos Stock Crashed 10% Today

Shares of Kratos Defense & Security Solutions (NASDAQ: KTOS) stock crashed by as much as 10.4% in early trading Friday, before clawing their way back up to close at a 9% loss.

Expectations were high for Kratos heading into earnings day. In its last earnings report, Kratos had promised investors that it would earn a profit in the second quarter, grow steadily more profitable as the year progressed, then begin generating positive free cash flow in 2018 -- but that's not how things turned out.

Not in Q2, at least. Instead of a GAAP (generally accepted accounting principles) profit, Kratos investors had to settle for a $0.07-per-share GAAP loss for the fiscal second quarter, and a "pro forma" loss of only $0.01. On the plus side, analysts had not bought fully into Kratos's story, and had told investors to expect the penny-a-share loss. Thus, the good news is that Kratos at least met expectations for earnings.

Source: Fool.com