The Short Answer
Kratos Defense stock (KTOS) is considered halal under standard Sharia screening. As with other defense contractors, supplying equipment and technology to national defense is treated by most contemporary screening boards as a permissible activity with no haram revenue line. Kratos also operates with modest leverage.
Current quantitative Sharia screen
Based on 10-Q figures for the period ended 2026-03-29; calculated 2026-07-15.
0 / 4,042.7
1,464.3 / 4,042.7
1,992.9 / 4,042.7
4.5 / 371
- Financial
- Fails
- Overall
- Fails
Liquidity/assets is 36.22%, above the examined 33.333% limit; receivables-plus-cash/assets is 49.30%.
- Financial
- Fails
- Overall
- Fails
Receivables-plus-cash/assets is 49.30%, above the examined MSCI 33.33% limit; debt and liquidity remain below limits.
- Financial
- Fails
- Overall
- Fails
Liquidity/assets is 36.22%, above the examined Malaysia 33% limit; this is not an official classification.
- Financial
- Not calculated
- Overall
- Fails
A properly licensed and reproducible historical market-cap series is not stored; the MSCI receivables-plus-cash screen fails.
Business-activity disclosure
Kratos designs unmanned systems, satellite communications, propulsion and defense electronics for government and military customers; defense manufacturing is generally permissible.
Limitation: The filing does not provide a universal prohibited-revenue numerator or a school-neutral ethical ruling on defense end use.
Purification
The filing discloses $4.5 million of nonoperating interest income (1.21% of revenue); treatment is disclosed for transparency, but no scholar-approved purification percentage is asserted.
Inputs, assumptions and primary sources
- Amounts are USD millions from Kratos's March 29, 2026 Form 10-Q.
- No conventional interest-bearing debt balance is reported; the filing's debt section contains only issuance-cost disclosure, so debt is set to zero rather than inferred from operating liabilities.
- Cash is $1,464.3 million. Receivables combine accounts receivable of $194.5 million and unbilled receivables of $334.1 million.
- Nonoperating interest income of $4.5 million is 1.21% of quarterly revenue; this is a disclosed line, not a purification ruling.
- Defense technology and unmanned systems are generally treated as permissible, but contract/customer ethics and end-use remain qualitative.
This is a reproducible financial screen, not a fatwa. A failed total-assets screen can coexist with a pass under a market-cap methodology. ZakatInvest keeps the qualitative assessment separate so numerical thresholds do not erase material context.
Its total-debt-to-market-cap ratio generally screens within the 33% threshold and should be confirmed against the latest filings, and incidental interest income on cash should be checked against the 5% threshold and purified.
Sharia Screening Methodology
Islamic scholars use several criteria to screen stocks:
- Business activity screen: Is the company's primary business halal?
- Debt ratio: Total debt / market cap must be under 33%
- Interest income: Interest income / total revenue must be under 5%
- Haram revenue: Revenue from haram sources must be under 5%
- Receivables ratio: Total receivables / total assets must be under 49–70% (varies by board)
Kratos's Business Activity
Kratos Defense & Security Solutions builds defense technology. Its activity is:
- Unmanned systems: Unmanned aerial systems and target drones
- Space & comms: Satellite communications and ground systems
- Defense electronics: Propulsion, microwave electronics, and C5ISR systems
Supplying defense technology is treated as a permissible activity by most contemporary screening boards, with no haram revenue line.
Why KTOS Is Halal
1. Permissible Core Business
Designing and manufacturing defense technology is treated as a halal industrial business by most screening boards, supplying national-defense customers. There is no gambling, alcohol, conventional banking, or other prohibited line at the heart of the business.
2. Debt Ratio Is the Item to Watch
Kratos has historically operated with modest leverage, so its total-debt-to-market-cap ratio generally screens within range. Confirm it sits under the 33% threshold on the latest filings before investing — this is the primary screening item.
3. Interest on Cash to Purify
Incidental interest income on cash should be confirmed against the 5% threshold and the corresponding small portion of returns purified. Some investors apply an ethical preference of their own to defense exposure.
Current Filing-Based Quantitative Screen
Kratos's March 29, 2026 filing reports debt/assets of 0.00%, liquidity/assets of 36.22% and receivables-plus-cash/assets of 49.30%. Disclosed nonoperating interest income is $4.5 million, or 1.21% of quarterly revenue.
- Debt/assets: 0.00%; no conventional interest-bearing debt line is reported ✅
- MSCI receivables-plus-cash: 49.30%, above the examined 33.33% limit ❌
- Interest income/revenue: 1.21%; disclosed for transparency, not a purification ruling ⚠️
- Business activity: Defense technology generally permissible, with end-use review ⚠️
Methodology Interpretation
Our asset-based calculations fail the examined FTSE Yasaar and Malaysia liquidity limits and the MSCI receivables-plus-cash limit. The market-cap denominator is not calculated; the qualitative defense assessment remains separate from this methodology difference.
Bottom Line
Kratos Defense (KTOS) is halal for Muslim investors under the same screens applied to other defense contractors. The business is treated as permissible; the main caveat is confirming total debt / market cap under 33%, and purifying the minor portion of returns attributable to interest income on cash. Some investors apply an ethical preference of their own to defense.
For Muslim investors seeking aerospace and defense exposure, compare KTOS with peers like L3Harris (LHX) and Heico (HEI).
Want to check if another stock is halal? Use our free screener.
Open Halal Checker →