Comparing Red Cat (NASDAQ:RCAT) and AeroVironment (NASDAQ:AVAV)

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

Analyst Ratings

This is a summary of recent ratings and target prices for AeroVironment and Red Cat, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AeroVironment	1	5	19	2	2.81
Red Cat	2	1	5	2	2.70

AeroVironment presently has a consensus target price of $223.86, suggesting a potential upside of 115.78%. Red Cat has a consensus target price of $16.29, suggesting a potential upside of 350.50%. Given Red Cat’s higher possible upside, analysts clearly believe Red Cat is more favorable than AeroVironment.

Valuation & Earnings

This table compares AeroVironment and Red Cat”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AeroVironment	$2.00 billion	2.63	-$265.12 million	($2.34)	-44.33
Red Cat	$71.54 million	6.20	-$72.07 million	($0.81)	-4.46

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

Risk and Volatility

AeroVironment has a beta of 1.42, meaning that its stock price is 42% more volatile than the S&P 500. Comparatively, Red Cat has a beta of 1.72, meaning that its stock price is 72% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
AeroVironment	-5.77%	4.04%	3.13%
Red Cat	-136.26%	-32.25%	-28.48%

Insider and Institutional Ownership

86.4% of AeroVironment shares are held by institutional investors. Comparatively, 38.0% of Red Cat shares are held by institutional investors. 0.8% of AeroVironment shares are held by company insiders. Comparatively, 12.5% of Red Cat 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.

About AeroVironment

AeroVironment, Inc. designs, develops, produces, delivers, and supports a portfolio of robotic systems and related services for government agencies and businesses in the United States and internationally. It operates through Small Unmanned Aircraft Systems (SUAS), Tactical Missile System (TMS), Medium Unmanned Aircraft Systems (MUAS), and High Altitude Pseudo-Satellite Systems (HAPS) segments. The company supplies UAS, TMS, unmanned ground vehicle, and related services primarily to organizations within the U.S. Department of Defense, other federal agencies, and to international allied governments. It also designs, engineers, tools, and manufactures unmanned aerial and aircraft systems, including airborne platforms, payloads and payload integration, ground control systems, and ground support equipment and other items and services related to unmanned aircraft systems. In addition, the company offers small UAS products, including training, spare parts, product repair, product replacement, and the customer contracted operation. Further, it develops high-altitude pseudo-satellite UAS systems. AeroVironment, Inc. was incorporated in 1971 and is headquartered in Arlington, Virginia.

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.