Taking the occasional loss comes part and parcel with investing on the stock market. And there's no doubt that Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) stock has had a really bad year. The share price is down a hefty 52% in that time. Notably, shareholders had a tough run over the longer term, too, with a drop of 39% in the last three years. The falls have accelerated recently, with the share price down 21% in the last three months.

If the past week is anything to go by, investor sentiment for Kratos Defense & Security Solutions isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

Check out our latest analysis for Kratos Defense & Security Solutions

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Kratos Defense & Security Solutions fell to a loss making position during the year. While this may prove temporary, we'd consider it a negative, so it doesn't surprise us that the stock price is down. However, there may be an opportunity for investors if the company can recover.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. Dive deeper into the earnings by checking this interactive graph of Kratos Defense & Security Solutions' earnings, revenue and cash flow.

A Different Perspective

We regret to report that Kratos Defense & Security Solutions shareholders are down 52% for the year. Unfortunately, that's worse than the broader market decline of 19%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 3% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. Investors who like to make money usually check up on insider purchases, such as the price paid, and total amount bought. You can find out about the insider purchases of Kratos Defense & Security Solutions by clicking this link.

Kratos Defense & Security Solutions is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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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.