Critical Analysis: Red Cat (NASDAQ:RCAT) vs. RTX (NYSE:RTX)

Red Cat (NASDAQ:RCAT) and RTX (NYSE:RTX) are both industrials companies, but which is the better business? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, earnings, dividends, profitability and analyst recommendations.

Insider & Institutional Ownership

38.0% of Red Cat shares are held by institutional investors. Comparatively, 86.5% of RTX shares are held by institutional investors. 12.5% of Red Cat shares are held by company insiders. Comparatively, 0.1% of RTX shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Red Cat and RTX’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Red Cat	-136.26%	-32.25%	-28.48%
RTX	8.28%	13.99%	5.51%

Risk & Volatility

Red Cat has a beta of 1.51, meaning that its share price is 51% more volatile than the S&P 500. Comparatively, RTX has a beta of 0.31, meaning that its share price is 69% less volatile than the S&P 500.

Earnings and Valuation

This table compares Red Cat and RTX”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Red Cat	$40.73 million	13.62	-$72.07 million	($0.81)	-5.58
RTX	$93.50 billion	2.78	$6.73 billion	$5.68	34.01

RTX has higher revenue and earnings than Red Cat. Red Cat is trading at a lower price-to-earnings ratio than RTX, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current ratings and recommmendations for Red Cat and RTX, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Red Cat	2	1	5	2	2.70
RTX	1	8	18	0	2.63

Red Cat currently has a consensus target price of $16.71, suggesting a potential upside of 269.79%. RTX has a consensus target price of $226.75, suggesting a potential upside of 17.39%. Given Red Cat’s stronger consensus rating and higher probable upside, research analysts plainly believe Red Cat is more favorable than RTX.

Summary

RTX beats Red Cat on 9 of the 15 factors compared between the two stocks.

About Red Cat

Red Cat Holdings, Inc. engages in the provision of various products, services, and solutions to the drone industry. The company operates through two segments: Enterprise and Consumer. It built infrastructure to manages drone fleets and fly, and provide services remotely, navigate confined industrial interior spaces and dangerous military environment. Red Cat Holdings, Inc. is based in San Juan, Puerto Rico.

About RTX

RTX Corporation, an aerospace and defense company, provides systems and services for the commercial, military, and government customers in the United States and internationally. It operates through three segments: Collins Aerospace, Pratt & Whitney, and Raytheon. The Collins Aerospace Systems segment offers aerospace and defense products, and aftermarket service solutions for civil and military aircraft manufacturers and commercial airlines, as well as regional, business, and general aviation, defense, and commercial space operations. This segment also designs, produces, and supports cabin interior, including oxygen systems, food and beverage preparation, storage and galley systems, and lavatory and wastewater management systems; battlespace, test and training range systems, crew escape systems, and simulation and training solutions; information management services; and aftermarket services that include spare parts, overhaul and repair, engineering and technical support, training and fleet management solutions, and asset and information management services. Its Pratt & Whitney segment supplies aircraft engines for commercial, military, business jet, and general aviation customers; and produces, sells, and services military and commercial auxiliary power units. The Raytheon segment provides defensive and offensive threat detection, tracking, and mitigation capabilities for U.S., foreign government, and commercial customers. The company was formerly known as Raytheon Technologies Corporation and changed its name to RTX Corporation in July 2023. RTX Corporation was incorporated in 1934 and is headquartered in Arlington, Virginia.