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The Trader: Earning Season Over, Stocks Quietly -2-

19 May 2018 10:00 am

Axler also notes that accounting actions boosted the drone maker's March quarter results. A change in the way Kratos recognized revenue contributed more than 5% of the quarter's $143 million in revenue. The company lost money on the basis of generally accepted accounting principles, but the $7 million it reported in operating profits was helped by a surprising drop in depreciation and amortization charges. Kratos didn't respond to our request for comment.

So why pay a cash-flow multiple for Kratos that is more than twice that of Lockheed? Unlike Kratos, notes Axler, Lockheed Martin (LMT) has consistent cash flow, pays a dividend, and is buying back stock. "Kratos keeps saying they're going to generate cash flow," says Axler. "But they continue to disappoint."

--Bill Alpert

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(END) Dow Jones Newswires

May 19, 2018 06:00 ET (10:00 GMT)

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