$KRMN Due Diligence — Karman Holdings Inc.
Buy · 8/10 — full report on Stockato.
- Price: $59.78
- P/E: 229.67
- Market cap: $7.3B
- Revenue (TTM): $523M
- Profit margin: 6%
VERDICT: BUY
SCORE: 8/10
CONFIDENCE: HIGH — earnings catalyst and guidance raise dominate mixed options/insider signals
COMPANY OVERVIEW
Karman Holdings Inc. (NYSE: KRMN) designs and manufactures mission-critical systems for missiles, hypersonics, space launch, and defense programs through its Karman Space and Defense subsidiary. The company operates in the aerospace & defense sector with TTM revenue of $523M and a $7.3B market cap.
KEY FUNDAMENTALS
Revenue TTM $523M, +51% YoY quarterly growth, EBITDA $136M, operating margin 15.5%, profit margin 5.7%. Trailing PE 230x, forward PE 92x, EV/revenue 13.7x. Analyst consensus: 10 buy/strong-buy, 1 sell, $102 target (70% upside from $59.78). Short interest 8.4% of shares, up 29% MoM.
BULL CASE
- Q2 2026 beat: Adj. EPS $0.14 vs $0.13 est, sales $182M vs $180M est; raised FY2026 revenue guidance to $730–745M and EBITDA to $215–222.5M.
- Record backlog $1.3B (+65% YTD) including large multiyear Space & Launch win; Tactical Missiles segment +55% YoY to $63M on UAS/counter-UAS ramps.
- Organic growth 24.4%, broad-based strength, funded backlog hit $719M earlier in cycle; management credibility score 9/10 with repeated guidance beats.
- 10/11 analysts bullish with $102 target; defense spending tailwinds intact.
BEAR CASE
- Valuation stretched: 230x trailing earnings, 14x sales, 52-week range position only 22% (high was $118).
- Short interest jumped 2.5M shares (+29% MoM) to 8.9% of float; beta 2.25 implies sharp downside on any growth hiccup.
- MIXED_FLOW options positioning (49% bullish premium) with heavy call selling at $60 Sep-18 strike.
- No informative insider buying in 90 days; all 14 trades filtered as routine.
OPTIONS POSITIONING
MIXED_FLOW (49% bullish premium = $655.5K calls vs $679.9K puts across 30 alerts, net –$24K directional). Top trades: $189k SOLD CALL $60 2026-09-18; $151k SOLD CALL $45 2026-07-17; $119k BOUGHT CALL $50 2026-07-17; $100k SOLD CALL $50 2026-08-21; $91k BOUGHT CALL $60 2026-09-18 SWEEP. IV skew –62.7pp shows calls richer than puts (speculation priced in). Flow conflicts with the strong fundamental beat; largest trades are hedge-shaped call sales rather than directional longs.
INSIDER ACTIVITY
No informative buys or sells in 90 days; $0 net value across 14 total trades, all filtered as routine/uninformative. Sentiment neutral per data.
X / SOCIAL CHATTER
Q2 beat-and-raise featured record $182M revenue (+58% YoY), 24% organic growth, and $1.3B backlog; Tactical Missiles drove outsized gains. "@SpaceInvestor_D: $KRMN: Karman delivered a clean beat-and-raise print. Bookings hit nearly $500M, roughly 2.7× quarterly revenue... Adjusted EBITDA was $54.6M, up 55%... Management raised FY2026 guidance." "@invest091: Q2 '26 revenue hit a record $182M (+58% YOY), with 24% organic growth! ... I now own $TDG and $KRMN in the space."
MANAGEMENT CREDIBILITY
9/10 credibility score. Four straight quarters of guidance hits or raises (Q1-Q4 2025 and Q1 2026), seamless CEO transition, and disciplined M&A execution with no red flags or goalpost shifting.
KEY CATALYSTS
Q2 earnings momentum and raised FY2026 guidance; potential further defense budget tailwinds and contract wins.
KEY RISKS
High valuation leaves little room for execution miss; short-interest ramp and beta 2.25 amplify downside volatility.
BOTTOM LINE
KRMN ripped 8.45% on a clean Q2 beat-and-raise with record backlog and segment momentum; the fundamental setup remains attractive at 70% below analyst targets despite stretched multiples and mixed options flow.
How KRMN trades
73% below its 52-week high; worst drawdown in the past year 73%.
Moved 7.9% on average (absolute) across the last 7 earnings reports.
Behind SPY by 41.7 pts over 3 months.
Trades as a market-like name: β 1.3 to QQQ, 5.6× SPY's volatility.
Realized volatility is 63% over 20 days, in line with its 1-year 73%.
One-year beta: 2.32 to SPY, 1.28 to QQQ (data-vendor beta 0.55).
Correlation of daily returns: SPY 0.39 (60 days) / 0.41 (1 year); QQQ 0.31 (60 days) / 0.35 (1 year); IWM 0.47 (60 days) / 0.47 (1 year); XLI 0.56 (60 days) / 0.44 (1 year); 10y yield (daily change) -0.06 (60 days) / -0.12 (1 year).
Realized volatility: 63% (20 days), 66% (60 days), 73% (1 year).
Maximum drawdown over the past year -73%; -73% from the 52-week high.
KRMN options and volatility
25-delta puts trade 9.3 vol points above calls in the nearest monthly expiry.
ATM implied vol runs 87% at 8 days to 74% at 162 days (inverted).
Options price 1.39× the last 20 days' realized volatility — rich.
The first expiry after earnings (2026-11-20, 43 days out) prices ±24.1%, which also covers 43 days of ordinary movement; the average move on earnings day itself has been 7.9%.
Dealers are short gamma; call wall 30.0, put wall 30.0.
Options-implied expected moves: next monthly (2026-10-16): ±$3.48 (±11.07%); earnings expiry (2026-11-20): ±$7.57 (±24.13%).
Options data as of 2026-10-08 07:15 UTC.