Karman Holdings Inc.
KRMN
$62.16
+6.75%
Karman Holdings Inc. is a specialty aerospace and defense company that designs, tests, and manufactures mission-critical systems for missile, defense, and space programs, including payload protection, propulsion, and interstage solutions. As a niche player in the defense supply chain, it supports key Department of Defense initiatives and benefits from rising geopolitical tensions and increased defense spending. The current investor narrative centers on its strong growth trajectory, record backlog, and raised guidance, but also on significant stock price volatility and valuation concerns after a sharp decline from its highs. Recent news highlights its positioning in the space launch bottleneck and defense spending tailwinds, making it a focus for growth-oriented investors.…
KRMN
Karman Holdings Inc.
$62.16
Related headlines
Investment Opinion: Should I buy KRMN Today?
Rating: Hold. Karman's strong revenue growth and record backlog are offset by extreme valuation and financial fragility. The analyst consensus is Buy with an average target of $102.00, implying 85% upside, but the risk-reward is balanced given the high uncertainty.
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KRMN 12-Month Price Forecast
Karman's growth prospects are compelling, but the valuation is stretched, and financial leverage adds risk. The stock's recent decline suggests the market is already pricing in some pessimism, but the high forward PE leaves little room for error. I would upgrade to bullish if the company demonstrates sustained profitability and free cash flow improvement, or if the stock drops to a more reasonable valuation. Conversely, a downgrade to bearish would occur if revenue growth decelerates or debt levels increase.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Karman Holdings Inc.'s 12-month outlook, with a consensus price target around $90.20 and implied upside of +45.1% versus the current price.
Average Target
$90.20
0 analysts
Implied Upside
+45.1%
vs. current price
Analyst Count
—
covering this stock
Price Range
$37 - $135
Analyst target range
Karman is covered by 10 analysts, with a consensus recommendation of 'Buy' and a mean rating of 1.64 (where 1 is Strong Buy). The average target price is $102.00, implying an 85% upside from the current price of $55.14. The distribution includes 7 Buy/Overweight ratings, 2 Hold, and 1 Sell, indicating a predominantly bullish sentiment. The target range spans from a low of $37.00 to a high of $135.00, with the high target assuming continued strong growth and multiple expansion, while the low target reflects risks of margin compression or execution issues. Recent ratings have been stable, with no major downgrades, and the wide spread between low and high targets highlights significant uncertainty about the stock's future performance.
Bulls vs Bears: KRMN Investment Factors
Karman presents a compelling growth story with accelerating revenue, record backlog, and expanding margins, supported by strong defense and space tailwinds. However, the stock's extreme valuation, high leverage, and thin profitability create significant risks. Currently, the bear case has stronger evidence due to the unsustainable valuation and financial fragility, but the bull case hinges on the company's ability to execute on its backlog and achieve the earnings growth implied by forward multiples. The key tension is whether Karman can grow into its valuation before market sentiment shifts, as any miss in execution could trigger a severe de-rating.
Bullish
- Revenue Growth Accelerating: Q1 2026 revenue surged 51.02% YoY to $151.21M, up from $100.12M in Q1 2025, with sequential growth from $134.49M in Q4 2025. This indicates strong demand across missile, defense, and space programs.
- Record Backlog and Raised Guidance: The company reported a record $1 billion backlog and raised guidance, reflecting robust order visibility. This supports long-term revenue growth and provides a solid foundation for future earnings.
- Gross Margin Expansion: Gross margin improved to 42.24% in Q1 2026 from 39.40% in Q1 2025, driven by better product mix and cost management. This trend enhances profitability potential as revenue scales.
- Analyst Consensus Buy with High Upside: With 10 analysts, the consensus is Buy (mean rating 1.64) and the average target price of $102.00 implies 85% upside from the current price of $55.14. This suggests significant undervaluation in the eyes of sell-side analysts.
Bearish
- Extreme Valuation Premium: Trailing PE is 562.85x, and forward PE is 59.88x, versus the industry average of 22x. This implies the market is pricing in exceptional future growth, leaving little room for error.
- High Debt and Interest Burden: Debt-to-equity is 1.53, and Q1 2026 interest expense was $12.65M, which consumed 58% of operating income. This leverage amplifies financial risk and limits net margin expansion.
- Thin Profitability: Net margin is only 5.15% in Q1 2026, and ROE is 4.54%. Despite strong revenue growth, the company struggles to convert sales into meaningful bottom-line profits.
- Severe Price Volatility: The stock has a max drawdown of -61.11% and is trading 53.4% below its 52-week high of $118.38. This volatility indicates high risk and potential for further downside.
KRMN Technical Analysis
Karman's stock has experienced a dramatic decline over the past year, with a 1-year price change of +13.46% masking a severe drawdown from its 52-week high. The current price of $55.14 sits at only 46.6% of its 52-week range (between $43.68 and $118.38), indicating it is trading near the lower end of its range. This positioning suggests the stock is in a deep correction, potentially offering value but also signaling persistent selling pressure and a lack of momentum.
Beta
—
—
Max Drawdown
-61.1%
Largest decline past year
52-Week Range
$44-$118
Price range past year
Annual Return
+35.8%
Cumulative gain past year
| Period | KRMN Return | S&P 500 |
|---|---|---|
| 1m | +24.3% | +2.4% |
| 3m | -0.5% | +4.7% |
| 6m | -21.8% | +11.7% |
| 1y | +35.8% | +21.3% |
| ytd | -19.1% | +13.4% |
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KRMN Fundamental Analysis
Karman's revenue growth has been robust, with the most recent quarter (Q1 2026) reporting revenue of $151.21 million, a 51.02% YoY increase. This growth is accelerating, as prior quarters showed sequential increases from $100.12 million in Q1 2025 to $134.49 million in Q4 2025. The company's gross margin improved to 42.24% in Q1 2026, up from 39.40% in Q1 2025, indicating better cost management and product mix. However, net income of $7.79 million in Q1 2026 represents a net margin of only 5.15%, reflecting high interest expenses and other costs that compress profitability.
Quarterly Revenue
$151210000.0B
2026-03
Revenue YoY Growth
+51.0%
YoY Comparison
Gross Margin
42.2%
Latest Quarter
Free Cash Flow
$-30995000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
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Valuation Analysis: Is KRMN Overvalued?
Given that Karman is profitable, the PE ratio is the primary valuation metric. The trailing PE is 562.85x, while the forward PE is 59.88x, implying the market expects significant earnings growth. This wide gap suggests optimism about future profitability, but the trailing multiple is extremely high, indicating the stock is priced for perfection. Compared to the industry average PE of 22x, Karman trades at a massive premium of over 2,400%, which is unjustified by its current net margin of 3.68% and ROE of 4.54%. Historically, the stock's PE has ranged from 211x to 591x over the past year, and it is currently near the lower end of that band, suggesting the market has already de-rated the stock but still values it richly.
PE
562.8x
Latest Quarter
vs. Historical
High-End
5-Year PE Range 211x~439x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
85.4x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: Karman's high debt-to-equity ratio of 1.53 and interest expense of $12.65M in Q1 2026, which consumed 58% of operating income, pose significant financial risk. The company's net margin of only 5.15% and ROE of 4.54% indicate weak profitability, and its negative free cash flow of -$30.995M TTM suggests cash burn that could necessitate additional debt or equity financing. Revenue concentration in defense programs tied to government budgets exposes the company to policy shifts, and the reliance on a few large contracts could lead to volatility if orders are delayed or canceled.