RE:Surprise, Suprise, Kraken Robotics Didn't Learn Their Lesson Hi Moose, I did a write up not long ago comparing the US companies in the aerospace/defence with Kraken and I found that Kraken is relatively undervalued by at least 30%. However, the industry itself may be considered overvalued so one cannot simply look at relative valuation alone.
If the company chooses debt over equity and grows cash flows at a rate higher than its weight average cost of capital then it's a win win for shareholders. With leverage, a company can drastically improve its return on equity which ultimately drives investment returns. If your returns on equity is above your cost of equity, then any capital projects will create additional value which is what you want to see. Kraken looks to be heading in that direction and as long as debt is manageable and could be paid off with existing cash flows then I'm ok with it.