Red Cat Holdings Inc. Common Stock (RCAT)

FairStock Score: 32/100 — RISKY

Key Financials

AI Analysis

AI-generated, general educational analysis — not personal investment advice.

I look for businesses that earn consistent profits and sell below intrinsic value. Red Cat does not yet fit that mold. It designs small tactical drones for defense and national security, a field with real barriers, but in fiscal Q2 2026 (quarter ended 2026-06-30) it reported revenue of $20.2M and a net loss of $35.3M, or diluted EPS of -$0.26. In fiscal Q1 2026 (quarter ended 2026-03-31), revenue was $15.5M and net loss $26.6M, EPS -$0.22. For FY2025, revenue was $40.7M and net loss $72.1M, EPS -$0.73; FY2024 revenue was $17.8M and net loss $24.1M. Sales are scaling, with fiscal Q2 2026 revenue of $20.2M versus $3.2M in fiscal Q2 2025 (quarter ended 2025-06-30), but losses are scaling faster. Trailing free cash flow was -$157.7M, a FairStock-calculated FCF yield of -19.9%. At the 2026-10-13 close of $5.18, FairStock shows P/B 1.68 and P/E -6.48; negative earnings make the P/E meaningless and leave no Graham-style margin of safety from earnings. Debt/equity is low at 0.03 and Altman Z-Score is 8.45, but the Piotroski F-Score is only 4/9 and FairStock score is 32/100. The Lynch category is none because the company lost money in each of the last four years. A defense drone niche can be valuable if it converts contracts into profits, but so far Red Cat is a story stock, not a proven compounding machine. I would want to see cash burn shrink and net income approach breakeven before trusting the valuation.

In plain English: Red Cat makes small drones and robotic systems for defense and security customers. Sales are growing fast, but the company is losing a lot of money and burning cash. At its recent price of $5.18, the stock looks expensive compared with its current sales and profits, because it has no profits yet.

The full AI analysis, bull and bear case and key monitorables are in FairStock Pro.

Data as of 2026-10-13 close · note generated 2026-10-15 · model deepseek-flash

Sources (SEC EDGAR): fiscal Q2 2026 10-Q (period ended 2026-06-30) · fiscal Q1 2026 10-Q (period ended 2026-03-31) · fiscal Q3 2025 10-Q (period ended 2025-09-30) · fiscal Q2 2025 10-Q (period ended 2025-06-30) · FY2025 10-K (period ended 2025-12-31) · FY2024 10-K (period ended 2024-04-30) · FY2023 10-K (period ended 2023-04-30)

Fundamentals from company filings and market-data providers; prices are end-of-day, not real-time. AI-generated analysis is general and educational — not personal investment advice. Scoring methodology · Score test · Disclaimer