VirTra (NASDAQ:VTSI – Get Free Report) and Red Cat (NASDAQ:RCAT – Get Free Report) are both small-cap industrials companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, valuation, profitability, institutional ownership, analyst recommendations, dividends and risk.
Insider & Institutional Ownership
14.7% of VirTra shares are owned by institutional investors. Comparatively, 38.0% of Red Cat shares are owned by institutional investors. 3.5% of VirTra shares are owned by insiders. Comparatively, 12.5% of Red Cat shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
Volatility and Risk
VirTra has a beta of 0.86, meaning that its stock price is 14% less volatile than the S&P 500. Comparatively, Red Cat has a beta of 1.51, meaning that its stock price is 51% more volatile than the S&P 500.
Profitability
This table compares VirTra and Red Cat’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| VirTra | -17.04% | -6.59% | -4.57% |
| Red Cat | -136.26% | -32.25% | -28.48% |
Analyst Recommendations
This is a summary of current ratings for VirTra and Red Cat, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| VirTra | 1 | 1 | 1 | 0 | 2.00 |
| Red Cat | 2 | 1 | 5 | 2 | 2.70 |
VirTra currently has a consensus target price of $5.00, indicating a potential upside of 86.57%. Red Cat has a consensus target price of $16.71, indicating a potential upside of 257.14%. Given Red Cat’s stronger consensus rating and higher possible upside, analysts plainly believe Red Cat is more favorable than VirTra.
Earnings and Valuation
This table compares VirTra and Red Cat”s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| VirTra | $22.40 million | 1.35 | $260,000.00 | ($0.26) | -10.31 |
| Red Cat | $40.73 million | 14.10 | -$72.07 million | ($0.81) | -5.78 |
VirTra has higher earnings, but lower revenue than Red Cat. VirTra is trading at a lower price-to-earnings ratio than Red Cat, indicating that it is currently the more affordable of the two stocks.
Summary
Red Cat beats VirTra on 9 of the 14 factors compared between the two stocks.
About VirTra
VirTra, Inc. provides use of force training and firearms training simulators for the law enforcement, military, and commercial markets worldwide. Its patented technologies, software, and scenarios provide intense training for de-escalation, judgmental use-of-force, marksmanship, and related training that mimics real-world situations. It offers V-300 simulator, a 300 degree wrap-around screen for simulation training; V-180 simulator, a 180 degree screen for smaller spaces or budgets; V-100, a single-screen based simulator system; V-100 MIL, a single-screen based simulator system; and V-ST PRO, a realistic single screen firearms shooting and skills training simulator. The company also provides Virtual Interactive Coursework Training Academy (V-VICTA), which enables law enforcement agencies to teach, train, test, and sustain departmental training requirements; and Subscription Training Equipment Partnership, a program that allows agencies to utilize its simulator products, accessories, and V-VICTA interactive coursework on a subscription basis. In addition, it offers V-Author software that allows users to create, edit, and train with content specific to agency’s objectives and environments; Simulated Recoil Kits, a range of realistic and reliable simulated recoil kits/weapons; Threat-Fire, a device that applies real-world stress on the trainees during simulation training; and TASER, an OC spray and low-light training devices that interact with its simulators for training. The company sells its simulators and related products through a direct sales force and distribution partners. The company was founded in 1993 and is headquartered in Chandler, Arizona.
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.
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