Critical Contrast: RTX (NYSE:RTX) versus Red Cat (NASDAQ:RCAT)

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

Analyst Recommendations

This is a breakdown of current recommendations for RTX and Red Cat, as reported by MarketBeat.

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

RTX presently has a consensus target price of $227.75, indicating a potential upside of 22.39%. Red Cat has a consensus target price of $16.71, indicating a potential upside of 240.07%. Given Red Cat’s stronger consensus rating and higher possible upside, analysts clearly believe Red Cat is more favorable than RTX.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
RTX	$88.60 billion	2.83	$6.73 billion	$5.68	32.76
Red Cat	$40.73 million	14.81	-$72.07 million	($0.81)	-6.07

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.

Volatility and Risk

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

Profitability

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

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

Insider and Institutional Ownership

86.5% of RTX shares are owned by institutional investors. Comparatively, 38.0% of Red Cat shares are owned by institutional investors. 0.1% of RTX shares are owned by company insiders. Comparatively, 12.5% of Red Cat shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

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

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.

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.