Kratos Defense & Security (KTOS 1.72%) stock slid 5% through 11:35 a.m. ET Thursday, not on any news from Kratos, but perhaps in reaction to an earnings report from Red Cat Holdings (RCAT +2.47%) last night.
Analysts forecast Red Cat to lose money in Q4, but not quite as much as it ultimately lost ($0.17 per share, versus $0.14 forecast).
Image source: Getty Images.
Red Cat Q4 earnings
Red Cat enjoyed tremendous sales growth -- nearly 2,000% for the quarter and 160% for the year. The company reported gross profits but net losses for both periods.
What does this have to do with Kratos, though? A couple things:
Like Red Cat, Kratos is in the business of manufacturing drones for the military. Like Red Cat, Kratos has experienced phenomenal sales growth, averaging 12.5% annually over the last five years, according to data from S&P Global Market Intelligence, 14.5% over the last three years, 18.5% last year, and 21.9% last quarter. (So sales growth is accelerating). Like Red Cat, Kratos continues to burn cash, and indeed, at $137 million over the last year, it is burning even more cash than Red Cat.
Unlike Red Cat, Kratos is already profitable, earning $22 million over the last 12 months.
NASDAQ: KTOS
Key Data Points
What it means for Kratos stock
All of which is to say that despite being an older company, Kratos looks a lot like Red Cat. Recent bad earnings news from Red Cat may therefore influence investors' opinion of Kratos stock as well.
The good news for Kratos shareholders, though, is that it's a lot farther along its growth path than Red Cat is. Kratos is profitable today and is expected to double its 2025 profits this year, then nearly double them again next year.
Red Cat isn't expected to be profitable... ever.
