Reviewing Park Aerospace (NYSE:PKE) and Red Cat (NASDAQ:RCAT)

Park Aerospace (NYSE:PKE) and Red Cat (NASDAQ:RCAT) are both small-cap industrials companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, valuation, risk, institutional ownership, analyst recommendations, earnings and profitability.

Institutional and Insider Ownership

77.8% of Park Aerospace shares are owned by institutional investors. Comparatively, 38.0% of Red Cat shares are owned by institutional investors. 7.1% of Park Aerospace 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, hedge funds and large money managers believe a company is poised for long-term growth.

Volatility & Risk

Park Aerospace has a beta of 0.4, indicating that its share price is 60% less volatile than the S&P 500. Comparatively, Red Cat has a beta of 1.35, indicating that its share price is 35% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Park Aerospace	16.70%	10.75%	9.77%
Red Cat	-136.26%	-32.25%	-28.48%

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Park Aerospace	$73.30 million	8.93	$11.27 million	$0.63	47.79
Red Cat	$40.73 million	20.69	-$72.07 million	($0.81)	-8.48

Park Aerospace has higher revenue and earnings than Red Cat. Red Cat is trading at a lower price-to-earnings ratio than Park Aerospace, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings for Park Aerospace and Red Cat, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Park Aerospace	0	0	4	0	3.00
Red Cat	1	1	5	2	2.89

Park Aerospace currently has a consensus price target of $42.50, suggesting a potential upside of 41.17%. Red Cat has a consensus price target of $16.71, suggesting a potential upside of 143.47%. Given Red Cat’s higher possible upside, analysts clearly believe Red Cat is more favorable than Park Aerospace.

Summary

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

About Park Aerospace

Park Aerospace Corp., an aerospace company, develops and manufactures solution and hot-melt advanced composite materials used to produce composite structures for the aerospace market in North America, Asia, and Europe. It offers advanced composite materials, including film adhesives and lightning strike protection materials that are used to produce primary and secondary structures for jet engines, large and regional transport aircrafts, military aircrafts, unmanned aerial vehicles, business jets, general aviation aircrafts, and rotary wing aircrafts. The company also provides specialty ablative materials for rocket motors and nozzles; and specially designed materials for radome applications. In addition, it designs and fabricates composite parts, structures and assemblies, and low volume tooling for the aerospace industry. The company was formerly known as Park Electrochemical Corp. and changed its name to Park Aerospace Corp. in July 2019. Park Aerospace Corp. was incorporated in 1954 and is based in Westbury, New York.

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.