Assessing Kraken Robotics (TSXV:PNG) Valuation As Defence And Offshore Contract Momentum Builds

Kraken Robotics: Why Recent Contract Momentum Matters

Kraken Robotics (TSXV:PNG) is drawing fresh investor attention as heightened defense spending and growing offshore wind and subsea infrastructure projects contribute to rising interest in its sonar systems, underwater robotics, and related services.

See our latest analysis for Kraken Robotics.

At a share price of CA$8.27, Kraken’s 1-day and 7-day share price returns of 1.10% and 11.91% sit alongside a 90-day share price return of 53.43%. Its one year total shareholder return above 200%, and very large three and five year total shareholder returns, point to strong momentum that investors are weighing against contract wins, growing backlogs and changing perceptions of future opportunity and risk.

If this kind of subsea robotics story has caught your eye, it could be a good moment to see what else is moving in underwater tech and automation through our 32 robotics and automation stocks.

With CA$101.93m in revenue, CA$16.48m in net income and a share price slightly above the latest analyst target, plus a very large three and five year total return, is Kraken still a buying opportunity, or is the market already pricing in future growth?

Preferred Price-to-Sales of 24.9x: Is It Justified?

Kraken is currently on a P/S of 24.9x, which sits well above both its estimated fair level and the wider electronics peer group, even after the recent share price run.

P/S compares the company’s market value to its annual revenue and is often used for businesses where earnings can be volatile or still developing. It gives a cleaner read on how much investors are paying for each CA$1 of sales.

Here, the gap is wide. Kraken’s 24.9x P/S contrasts with the estimated fair P/S of 6.5x. It is also far ahead of both the peer average of 14.4x and the North American electronic industry average of 2.8x. That indicates the market is assigning a much richer price tag to Kraken’s growth story than to many comparable names, and suggests there may be room for the multiple to compress toward that fair ratio if sentiment or expectations cool.

Explore the SWS fair ratio for Kraken Robotics

Result: Price-to-Sales of 24.9x (OVERVALUED)

However, the rich 24.9x P/S and a share price above the CA$8.00 analyst target leave less room for error if contract timing or defence budgets disappoint.

Find out about the key risks to this Kraken Robotics narrative.

Another Angle: Our DCF Model Points Lower

While the 24.9x P/S suggests the market is paying up for Kraken’s story, our DCF model tells a different tale. With a fair value estimate of CA$6.88 per share versus the current CA$8.27 price, the stock screens as overvalued on this approach and raises the question of how much optimism is already baked in.

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Kraken Robotics for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 6 high quality undervalued stocks. If you save a screener we even alert you when new companies match – so you never miss a potential opportunity.

Next Steps

If this mix of momentum, optimism and concern feels finely balanced, take a moment to review the numbers yourself and move quickly to shape your own view with 2 key rewards and 2 important warning signs.

Looking for more investment ideas?

If Kraken has sharpened your curiosity, do not stop here. The same energy you brought to this stock can help you spot other compelling setups with a few smart filters.

• Target potential upside with our list of 6 high quality undervalued stocks, which screen well on fundamentals and may offer more appealing entry points than momentum driven names.
• Strengthen your income side by reviewing 6 dividend fortresses, focused on companies with 5%+ yields that could complement growth oriented holdings.
• Sleep a little easier by checking 7 resilient stocks with low risk scores, highlighting companies that currently score well on balance sheet resilience and overall risk metrics.

This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your
financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Simply Wall St has no position in any stocks mentioned.

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