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  "docSlug": "68bd393edc75",
  "documentTitle": "Kratos Defense & Security Solutions (KTOS)",
  "authorId": "54_Spruce_Point_Capital",
  "authorName": "Ben Axler",
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  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2018-03-16 00:00:00",
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  "pageNumber": 47,
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  "notes": "The slide highlights the discrepancy between KTOS's high valuation multiples and its peer group, arguing the premium is unjustified.",
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      "text": "Wall Street is fixated on Kratos's earnings \"potential\" of >100% growth in the next few years and give KTOS a commanding 20x and 70x EBITDA and P/E ratio. Be warned: this growth is off a low EPS base, on highly adjusted figures, and will surely disappoint given Kratos demonstrated ability to poorly execute.",
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      "text": "P/E: 70x",
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      "text": "KTOS is trying to position itself as a play on drones to justify its valuation relative to a limited universe of pure-play stocks such as AeroVironment, which Spruce Point previously profiled as a repeated loser. Wall Street is fixated on Kratos' earnings \"potential\" of >100% growth in the next few years and give KTOS a commanding 20x and 70x EBITDA and P/E ratio. Be warned: this growth is off a low EPS base, on highly adjusted figures, and will surely disappoint given Kratos demonstrated ability to poorly execute.",
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      "kind": "source-note",
      "text": "Source: Company filings, Wall St estimates. 1) Assumes 2.5% annual depreciation on $127m of corporate segment assets",
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      "kind": "table",
      "text": "Peer comparison table including columns for Segment, Name, Price, % of 52-wk High, Ent. Value, Sales Growth, EPS Growth, P/E, EV/EBITDA, EV/Sales, Price/Book, Net Debt/EBITDA, and Dividend Yield.",
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      "kind": "title",
      "text": "KTOS Trading At An Unjustified Premium To Its Peers",
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      "evidence": "Direct comparison of KTOS valuation metrics against a peer group to argue for overvaluation.",
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      "evidence": "The deck presents Spruce Point's solution, a strong sell rating with 40-70% downside risk.",
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