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ZYBERNO

Stock Report

Updated Aug 31, 2026

Red Cat Holdings, Inc. (RCAT)

Technology • NASDAQ

$8.49

Professional Investment Analysis

ZYBERNO SCORE →

Is it a great business? Is it getting better?

30.0/100

WEAK BUSINESS

Red Cat Holdings, Inc. (RCAT) scores 30/100 — weak fundamentals with mixed indicators requiring careful analysis before acting.

📊 How is the Zyberno Score calculated? +

The Zyberno Score answers one question: "Is this a quality business worth owning?" It's a 0-100 investment grade that evaluates business fundamentals across four critical dimensions, based on principles from Warren Buffett, Benjamin Graham, Peter Lynch, and Charlie Munger.

The 4 Core Categories (25 points each):

1. PROFITABILITY (25 pts)

Metrics: ROE, ROIC, Net Margin, Operating Margin
Thresholds: ROE >20% excellent • ROIC >20% excellent • Net Margin >20% excellent • Operating Margin >25% excellent

2. FINANCIAL STRENGTH (25 pts)

Metrics: Debt-to-Equity, Current Ratio, Interest Coverage, Altman Z-Score
Thresholds: D/E <0.3 excellent • Current Ratio >2.5 excellent • Interest Coverage >10x excellent • Altman Z >3.0 safe

3. CASH FLOW QUALITY (25 pts)

Metrics: Free Cash Flow, OCF vs Net Income, FCF Margin
Thresholds: Positive & growing FCF excellent • OCF/NI >1.2x excellent (cash earnings exceed accounting)

4. GROWTH & CONSISTENCY (25 pts)

Metrics: Revenue Growth, Net Income Growth, FCF Growth, Piotroski F-Score
Thresholds: Growth via log-linear regression • Piotroski 8-9 excellent, 6-7 good

Score Interpretation:

75-100

GREAT BUSINESS

65-74

GOOD BUSINESS

50-64

AVERAGE BUSINESS

30-49

WEAK BUSINESS

0-29

POOR BUSINESS

→ View full RCAT quality analysis & detailed breakdown

VALUATION SIGNAL

N/A (Requires more data)

Requires fair value calculation and current price data

💰 How is Margin of Safety calculated? +

Margin of Safety measures how much discount or premium you're paying relative to a stock's intrinsic value. It's Benjamin Graham's core principle: the larger the margin, the lower your downside risk.

Formula: (Intrinsic Value − Current Price) ÷ Intrinsic Value × 100%

How We Calculate Intrinsic Value (DCF Method):

Step 1: Calculate current Owner Earnings (OCF − Maintenance CapEx)

Step 2: Calculate company-specific growth rate using log-linear regression on 16 quarters of Owner Earnings

Step 3: Project 10 years forward using the calculated growth rate

Step 4: Discount each year's cash flow to present value using 10% discount rate

Step 5: Calculate terminal value using 3% perpetual growth rate

Step 6: Sum all discounted cash flows = Intrinsic Value

What The Percentages Mean:

+50% or more

EXCELLENT — Very undervalued

+25% to +50%

GOOD — Attractive discount

0% to +25%

FAIR — Reasonable value

0% to -25%

CAUTION — Slight premium

-25% or worse

POOR — Overvalued

"Price is what you pay, value is what you get." — Warren Buffett

→ View full RCAT valuation analysis · → View full RCAT Brina Gap analysis

📈 How is Brina Gap calculated? +

Brina Gap measures the difference between the growth a business can fundamentally sustain and the growth the market is already pricing in.

Formula: Fundamental Growth Rate − Market-Implied Growth Rate

The Two Components:

Fundamental Growth Rate = ROIC × Reinvestment Rate

What the business can sustainably grow at based on how much it reinvests and what return it earns on that capital. Grounded in historical financials.

Market-Implied Growth Rate = Reverse DCF

The growth rate the current Enterprise Value implicitly assumes. Calculated by back-solving a 10-year DCF model (10% WACC, 3% terminal growth) until the present value of projected cash flows equals EV.

What The Gap Means:

Gap > +5% Market Underestimates — potential upside

+2% to +5% Slight Underestimate

-2% to +2% Fairly Priced — market consensus matches fundamentals

-5% to -2% Slight Overestimate

Gap < -5% Market Overestimates — price embeds optimism fundamentals don't support

A positive gap (market underestimates) combined with a positive Margin of Safety is the strongest combined signal — the business is both cheap historically and forward economics are stronger than the price suggests.

Critical Financial Health Indicators

Return on Equity (Profitability):CRITICAL (-32.3%)

Debt-to-Equity (Solvency Risk):EXCELLENT (0.06x)

Operating Margin (Operational Efficiency):CRITICAL (-144.4%)

Return on Capital (Capital Efficiency):CRITICAL (-50.0%)

📊 Valuation Trilogy

Three interconnected metrics for complete valuation analysis

Click any metric for full methodology and detailed analysis

Zyberno's Verdict

Red Cat Holdings, Inc. (RCAT) stock report — Zyberno Score 30/100 (WEAK BUSINESS). Full financial analysis on Zyberno.

Over the trailing twelve months, RCAT generated -$107.01M in Owner Earnings. Capital was deployed as follows: $13.16M invested in capital expenditures. Reinvestment rate: -5.5%.

DIVISION I: EXECUTIVE SUMMARY

A. Market Valuation

Market Price & Capitalization (2)

Current Price:8.49

Market Cap:$1.16B

Valuation Multiples (3)

P/B Ratio:2.47x

P/S Ratio:15.63x

Peg Ratio:-999.00x

Enterprise Metrics (1)

Enterprise Value:$852.27M

Price Action & Momentum (3)

12-1 Momentum:

-5.9% (80th pctile)

📈 Click to view full RCAT Momentum analysis →

Momentum Percentile:80 / 100

% of 52-Week High:45.2%

B. Profitability Assessment

Return Metrics (5)

ROE:

-32.3%

📊 Click to view full RCAT ROE analysis →

ROA:-28.5%

Roic:

-50.0%

📊 Click to view full RCAT ROIC analysis →

Reinvestment Rate:-5.5%

Fundamental Growth Rate (g):2.8%

Margin Analysis (3)

Operating Margin Ttm:-144.4%

Net Margin Ttm:-131.1%

Ebitda Margin:-139.0%

TTM Performance (3)

Gross Margin Ttm:9.4%

Operating Margin Ttm:-144.4%

Net Margin Ttm:-131.1%

Yield Metrics (2)

Earnings Yield:-$9.31

Dividend Yield:0.0%

C. Log-Linear Regression Growth Trends

Revenue Growth (Linear) (1)

Revenue Growth Rate (Linear):60.9%

D. Financial Stability

Liquidity Ratios (3)

Current Ratio:14.86x

Quick Ratio:12.29x

Cash Ratio:11.38x

Leverage Analysis (3)

Debt To Equity Ttm:0.06x

Debt-to-Equity Ratio:0.06x

Debt To Ebitda:-999.00x

Coverage Ratios (1)

Times Interest Earned:-999.00

Capital Structure (4)

Working Capital:396,499,000.00

Cash And Cash Equivalents:325,553,000.00

Long Term Debt:$12.53M

Net Debt:-$309.91M

DIVISION II: FINANCIAL STATEMENTS ANALYSIS

A. Income Statement Analysis

Revenue Components (2)

Revenue TTM: $74.37M

Linear Growth: 60.9%

📊 Click to view full RCAT Revenue analysis & methodology →

Cost Of Revenue Ttm:$64.57M

Profitability Breakdown (2)

Gross profit TTM: $6.97M

Linear Growth: 85.4%

📊 Click to view full RCAT Gross Profit analysis & methodology →

-$107.42M

Bottom Line Performance (3)

-$97.48M

Income Before Tax:-$116.57M

Ebitda Ttm:-103,406,122.00

Operating Expenses (5)

Operating Expenses:114,393,610.00

R And D Expense:33,050,140.00

Sga Expense:63,723,803.00

Income Tax Expense:$722.56K

Interest Expense:-12,132.00

Expense Ratios (3)

R And D To Revenue Percentage:163.7%

Sga To Revenue Percentage:315.6%

Ebitda Margin:-139.0%

B. Balance Sheet Analysis

Asset Composition (5)

Total Assets:$527.49M

Current Assets:$425.11M

Ppe Net:19,090,000.00

Goodwill:45,255,000.00

Intangible Assets:$22.04M

Liability Structure (4)

Total Liabilities:56,312,000.00

Current Liabilities:28,614,000.00

Long Term Debt:$12.53M

Short Term Debt:$3.11M

Equity & Capital (3)

Equity:$471.18M

Retained Earnings:-$258.63M

Common Stock:500,000,000.00

Working Capital Items (3)

Accounts Receivable:9,543,000.00

Inventory:73,389,000.00

Accounts Payable:12,778,000.00

Special Items (2)

Contract Liabilities:300,000.00

Stock Based Compensation:4,817,000.00

C. Cash Flow Analysis

Operating Activities (2)

-$105.17M-$118.33M

Investment Activities (2)

Investing Cash Flow:-$6.78M

Capital Expenditures Ttm:13,156,897.00

Financing Activities (3)

Financing Cash Flow:$2.78M

Dividends Paid Ttm:0.00

Stock Repurchase:0.00

Capital Transactions (3)

Common Stock Issuance:14,432,880.00

Long Term Debt Issuance:$0.00

Long Term Debt Repayments:$394.61K

Non-Cash Items (1)

Depreciation Amortization Ttm:4,013,132.00

DIVISION III: OPERATIONAL METRICS

A. Per Share Analysis

Earnings Per Share (3)

EPS (Basic TTM):-0.79

-$0.79

Earnings Per Share Ttm:-$0.71

Revenue & Cash Per Share (2)

Sales Per Share Ttm:0.54

Operating Cash Flow Per Share:-$0.65

Book Value & Capital (2)

Book Value Per Share:$3.44

Cash Per Share:2.38

Dividend Policy (1)

Dividend Payout Ratio:-999.00x

B. Operational Efficiency

Asset Utilization (2)

Asset Turnover Ttm:0.22x

Working Capital Turnover Ttm:0.19x

Receivables Management (2)

Receivables Turnover Ttm:7.79x

Days Sales Outstanding Ttm:46.83

Inventory Management (2)

Inventory Turnover Ttm:0.88x

Days Inventory Outstanding Ttm:414.87

Payables & Cash Cycle (2)

Days Payable Outstanding:72.24

Cash Conversion Cycle:389.47

C. Quality & Risk Metrics

Financial Quality Scores (2)

Financial Strength Score:100.00

Quality Score:40.00

Market Metrics (2)

Beta:0.00x

Volatility Category:unknown

DIVISION IV: INVESTMENT ANALYSIS

A. Value Investment Framework

Owner Earnings Analysis (1)

-$107.01M

Damodaran Growth Analysis (2)

Reinvestment Rate:-5.5%

Fundamental Growth Rate (g):2.8%

B. Log-Linear Regression Growth Analysis

Growth Rates (Log-Linear Regression) (1)

Revenue Growth Rate (Linear):60.9%

Other Growth Rates (2)

Gross Profit Growth Rate (Linear):85.4%

Book Value Growth Rate (Linear):30.3%

C. Company Profile & Context

Corporate Information (6)

Symbol:RCAT

Company Name:Red Cat Holdings, Inc.

Sector:Technology

Industry:Software

Exchange:NASDAQ

Country:United States

Market Classification (3)

Market Cap Category:N/A

Price Category:low

Volume Category:N/A

Share Structure (3)

Shares Outstanding:136.89M

Shares Outstanding Basic:136.89M

Shares Outstanding Diluted:136.89M

Data Processing Info (3)

Processing Version:v3.0

Last Updated:2026-08-31 11:03:11 UTC

Data Timestamp:2026-08-31T11:03:11.709145