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Red Cat Holdings Inc (RCAT)
NASDAQ:RCAT
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Red Cat Holdings
(NASDAQ:RCAT)
Select Model
Select Model
Rating:46Neutral
Price Target:
$13.50
▼(-1.24% Downside)
Action:ReiteratedDate:03/03/26
The score is primarily held down by weak financial performance driven by ongoing losses and negative cash flows despite strong revenue growth. Technicals provide some support from an uptrend versus moving averages, but mixed momentum indicators limit the uplift. Valuation impact is neutral due to missing P/E and dividend yield data.
Positive Factors
Strong TTM revenue growth
75% TTM revenue growth indicates durable demand for Red Cat’s UAS and related services. Sustained top-line expansion improves the company’s ability to scale operations, leverage fixed costs, and reinvest in product and software development to build recurring revenue streams over multiple quarters.
Hardware + software + services business model
A combined offering of Black Widow drones plus the TRICHON fleet-management platform and services creates a diversified revenue mix. Hardware sales plus subscription software and support improve customer stickiness, enable recurring revenue, and create cross-sell opportunities that support durable margin expansion if software uptake rises.
Modest leverage / manageable balance sheet
Low debt-to-equity (0.23) provides financial flexibility to invest in R&D, integrations, and contract fulfillment without high interest burden. Manageable leverage reduces refinancing risk and supports multi-quarter commercialization initiatives common in defense and autonomous systems markets.
Negative Factors
Persistent unprofitability and negative margins
Negative gross, operating and net margins, with net margin at -6.79%, show the company is not converting revenue into profit. Over months, persistent margin deficits can deplete equity, limit reinvestment capacity, and require structural cost or pricing changes to reach sustainable profitability.
Negative operating and free cash flow
Reported negative operating and free cash flow, despite some free cash flow growth, constrain the company’s ability to self-fund growth or absorb contract working-capital swings. Continued cash outflows increase reliance on external financing, which can limit strategic flexibility over multiple quarters.
Negative return on equity
A negative ROE signals the company is destroying shareholder capital rather than creating it. Without sustained shifts to positive net income and cash generation, ROE is likely to remain depressed, reflecting structural issues in capital efficiency and underlying profitability.
Red Cat Holdings (RCAT) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.63B
Dividend YieldN/A
Average Volume (3M)10.76M
Price to Earnings (P/E)―
Beta (1Y)1.43
Revenue GrowthN/A
EPS GrowthN/A
CountryUS
Employees115
SectorIndustrials
Sector Strength72
IndustryComputer Hardware
Share Statistics
EPS (TTM)-0.14
Shares Outstanding119,371,140
10 Day Avg. Volume8,452,544
30 Day Avg. Volume10,758,852
Financial Highlights & Ratios
PEG Ratio-0.05
Price to Book (P/B)7.66
Price to Sales (P/S)52.80
P/FCF Ratio-18.56
Enterprise Value/Market Cap0.64
Enterprise Value/Revenue71.89
Enterprise Value/Gross Profit6.43K
Enterprise Value/Ebitda-25.41
Forecast
1Y Price Target
$17.67Price Target Upside29.26% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering3
EPS Forecast (FY)-0.38
Revenue Forecast (FY)$142.72M
Red Cat Holdings Business Overview & Revenue Model
Company DescriptionRed Cat Holdings, Inc., through its subsidiaries, provides various products, services, and solutions to the drone industry. It offers commercial and government unmanned aerial vehicle technology for reconnaissance, public safety, and inspection applications. The company also provides First Person View (FPV) video goggles; and software and hardware solutions that enable drones to complete inspection services in locations where global positioning systems are not available. In addition, it is involved in the sales of FPV drones and equipment primarily to the consumer marketplace. Red Cat Holdings, Inc.is based in San Juan, Puerto Rico.
How the Company Makes MoneyRed Cat Holdings generates revenue through several key streams including the sale of drones and UAV technology, software licensing for drone operations, and training and support services for customers. The company also benefits from strategic partnerships with public safety organizations and defense agencies, enabling it to secure contracts for specialized drone applications. Additionally, recurring revenue is generated through ongoing maintenance contracts and subscriptions for software services, which provide customers with continuous access to updates and support. The growing demand for drone technology in various industries, particularly in public safety and defense, continues to bolster the company's earnings.
Red Cat Holdings Earnings Call Summary
Earnings Call Date:Mar 31, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Mar 18, 2026
Earnings Call Sentiment Neutral
The earnings call highlighted significant operational advancements such as the launch of the Long Beach factory and strategic partnerships like Palantir, suggesting positive growth prospects. However, there are uncertainties around financials due to CFO transition and additional funding, creating a mixed outlook.Q3-2025 Updates
Positive Updates
Long Beach Facility Launch
The Long Beach factory is operational and shipped its first drones in March, with expectations for monthly shipments as the facility scales and backlog is resolved.
Black Widow Competitive Advantage
Vehicle navigation for the Black Widow is almost complete, providing a unique competitive edge and expected to expand margins. Flight data and tests are promising.
Partnership with Palantir
Red Cat is partnering with Palantir for digital navigation, a critical software feature not yet included in guidance, expected to significantly enhance drone capabilities.
Potential Increase in LRIP
The Low Rate Initial Production (LRIP) is anticipated to be higher than previously reported, with additional contracts expected this year.
Negative Updates
Delayed CFO Involvement
Chris Erickson, the newly hired CFO, was not involved in the 10-K signing due to the timing of his employment, necessitating a brief earnings call.
Uncertainty in Additional Funding
There is uncertainty around receiving an additional $100 million in SRR funds for 2025, though the company is prepared to deliver if secured.
Company Guidance
During the conference call on March 31, 2025, Red Cat Holdings provided several key updates and forward-looking statements. Jeff Thompson, the CEO, announced that the company's Long Beach facility is operational and shipped its first drones in March, with plans to increase production monthly. The Black Widow drone has nearly completed its vehicle navigation feature, which is expected to enhance margins. The company has also signed a features contract for the Black Widow under the SIR program and anticipates signing the LRIP contract soon. International opportunities remain strong, particularly in collaboration with NATO allies. Additionally, Red Cat is integrating Palantir's operating system to improve efficiency and margins and expects significant financial impact from the digital navigation software, although this is not yet included in current financial guidance. The company has requested an additional $100 million for 2025 to support expanding drone capabilities, reflecting the growing importance of drones in modern warfare. A more detailed update is anticipated at an upcoming Investor Day Town Hall.Red Cat Holdings Financial Statement Overview
Summary
Strong top-line growth (75% TTM) is outweighed by persistent losses (negative gross/net/EBIT/EBITDA margins, net margin -6.79%) and negative operating and free cash flow. Low leverage (debt-to-equity 0.23) helps, but negative ROE and cash burn keep the score low.Income Statement
Red Cat Holdings shows significant revenue growth with a 75% increase in the TTM period. However, the company struggles with profitability, as indicated by negative gross, net, EBIT, and EBITDA margins. The net profit margin is particularly concerning at -6.79%, reflecting substantial losses.30
Negative
Balance Sheet
The company's debt-to-equity ratio is relatively low at 0.23, suggesting manageable leverage. However, the return on equity is negative, indicating that the company is not generating profit from its equity base. The equity ratio is not provided, but the overall financial stability appears weak due to consistent losses.40
Negative
Cash Flow
The cash flow analysis reveals a negative operating cash flow and free cash flow, although there is a notable improvement in free cash flow growth. The free cash flow to net income ratio is slightly above 1, indicating that cash flow is somewhat aligned with net income, but the overall cash flow position remains challenging.35
Negative
| Breakdown | TTM | Jun 2025 | Jul 2024 | Apr 2023 | Apr 2022 | Jul 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 14.49M | 7.28M | 17.84M | 4.62M | 6.43M | 5.00M |
| Gross Profit | 162.15K | -2.03M | 3.68M | -834.31K | 925.51K | 1.07M |
| EBITDA | -41.00M | -36.50M | -16.04M | -22.54M | -11.28M | -11.98M |
| Net Income | -52.42M | -65.42M | -24.05M | -28.11M | -11.69M | -13.24M |
Balance Sheet | ||||||
| Total Assets | 286.02M | 55.60M | 48.54M | 60.74M | 85.08M | 11.69M |
| Cash, Cash Equivalents and Short-Term Investments | 206.43M | 9.15M | 6.07M | 15.99M | 48.88M | 277.35K |
| Total Debt | 22.42M | 3.27M | 2.27M | 2.97M | 3.72M | 2.02M |
| Total Liabilities | 32.75M | 5.48M | 4.97M | 5.98M | 7.16M | 6.43M |
| Stockholders Equity | 253.27M | 50.12M | 43.56M | 54.77M | 77.92M | 5.27M |
Cash Flow | ||||||
| Free Cash Flow | -53.91M | -20.70M | -18.82M | -32.23M | -16.38M | -1.40M |
| Operating Cash Flow | -52.66M | -20.54M | -18.56M | -29.78M | -16.02M | -1.40M |
| Investing Cash Flow | -1.25M | 4.24M | 13.57M | 29.59M | -46.60M | -48.37K |
| Financing Cash Flow | 251.18M | 19.39M | 7.80M | -633.55K | 66.43M | 1.49M |
Red Cat Holdings Technical Analysis
Negative
13.67
Price Trends
11.90
Negative
10.84
Positive
9.78
Positive
Market Momentum
-0.05
Positive
45.44
Neutral
51.27
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RCAT, the sentiment is Negative. The current price of 13.67 is above the 20-day moving average (MA) of 12.52, above the 50-day MA of 11.90, and above the 200-day MA of 9.78, indicating a neutral trend. The MACD of -0.05 indicates Positive momentum. The RSI at 45.44 is Neutral, neither overbought nor oversold. The STOCH value of 51.27 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RCAT.
Red Cat Holdings Risk Analysis
Red Cat Holdings disclosed 46 risk factors in its most recent earnings report. Red Cat Holdings reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Red Cat Holdings Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $31.89B | 36.43 | 8.92% | ― | 7.41% | -12.85% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
52 Neutral | $10.40B | -166.12 | -2.64% | ― | 79.89% | -171.81% | |
52 Neutral | $15.45B | 689.36 | 1.31% | ― | 14.00% | 23.78% | |
48 Neutral | $420.85M | -1.56 | -10.03% | ― | 42.17% | -215.37% | |
46 Neutral | $1.63B | ― | ― | ― | ― | ― | |
45 Neutral | $45.73M | -0.27 | -110.92% | ― | -6.34% | 98.60% |
* Industrials Sector Average
RCAT
Red Cat Holdings
13.67
8.10
145.42%
AVAV
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208.32
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KTOS
Kratos Defense
90.72
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248.79%
TDY
Teledyne Technologies
688.59
175.63
34.24%
NNDM
Nano Dimension
1.94
-0.17
-8.06%
UAVS
AgEagle Aerial Systems
1.05
-0.29
-21.64%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.