Red Cat Holdings Inc. (NASDAQ: RCAT) has confirmed that it will release fiscal Q2 2022 earnings results for the quarter ending October 31, 2021, on December 20, 2021, after markets close.
What to look for
Red Cat offers secure blockchain-based distributed analytics, storage, and SaaS for the drone sector. In addition, the company offers solutions for regulators tracking and reviewing flight information, insurances forms to insure drones and pilots to be compliant with regulations. Over the past 12 months, the company has not been profitable, and the trend is likely to continue in Q2 2022, but revenue is expected to grow strongly attributed to the purchase order from Drone Nerds.
Earnings: Stockearning’s estimated EPS is expected to improve the loss per share of $0.05 reported in Q1 2022. In the second quarter of fiscal 2021, EPS was a loss of $0.04. Historical EPS Performance in the last 12 quarters shows that the company has never beat or missed earnings estimates.
Revenue: The company is expected to report strong revenue relative to the $1.4 million for fiscal Q1 2022. In the first quarter of 2021, the company had a revenue of $548,000. In addition, the company began Q2 2022 in a strong cash position with over $66 million in cash.
Stock movement: Since the last earnings release, RCAT shares have lost 13.3%. Red Cat Holdings shares have been DOWN 2 times in the last two quarters following the earnings release. So, the historical price reaction suggests a 100% probability of the share price going DOWN once RCAT reports its fiscal Q2 2022 quarterly earnings. According to the Stockearning algorithm, the predicted first-day move is 7%, while the predicted move on the seventh day is 37%.
What analysts are saying
ThinkEquity analyst Ashok Kumar commenced coverage on Red Cat Holdings with a Buy rating and price target of $8 per share. Kumar presented an investment thesis for the Puerto Rico-based unmanned aerial vehicle sector, stating it "is positioned to capitalize on the maturing drone market with high-performance products and business services for a variety of industries."
The analyst explained that the company established in 2016 currently encompasses four operational subsidiaries. The first subsidiary Rotor Riot is responsible for designing, purchasing, and reselling drone components and drones from produces, which accounts for half of the company's revenue. The other is Droneboc, a blockchain-based software solution that stores, records, and analyses drone obtained flight data to be offered on software SaaS. Last year, red Cat acquired its third subsidiary, Fat Shark, which offers drone products that include goggles and headsets using first-person-in-view piloted flights. Kumar noted, "Fat Shark is expected to constitute a majority of revenue and results of operations. This transformative acquisition will enable an encrypted, distributed network that provides secure data storage, operational analytics, reporting, and SaaS solutions for the drone market.”
The fourth subsidiary, Skypersonic, was acquired in May 2021, and it offers solutions for GPS-denied high-risk drone flights piloted through the internet. The analyst told investors, "Red Cat gets competitive advantages by leveraging the three companies [Rotor Riot, Fat Shark, and Skypersonic] to move beyond selling drones into selling drone services and solutions."
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