This is a Scorecard review, revisiting a past LF0 research call against what actually happened.
Ticker: RCAT Rating: Sell Published: 2026-07-22 Checkpoint: 2026-10-22 Entry price: $7.83 Latest price: $4.58 as of 2026-10-21 Stock return since entry: -41.5% Signal return: +41.5% Verdict: Correct so far
This is the 3-month checkpoint for this call. LF0 publishes monthly Scorecard updates through month 6, using the closest available daily close on or before the checkpoint date.
Previous checkpoint: our 2-month review (2026-09-22) was correct (stock return -11.4% since entry). Each monthly review is judged on its own date, so the verdict can change from one month to the next.
Read the original LF0 analysis
What I Said
I rated RCAT a Sell because I thought the core tension was unresolved: the company had a real defense qualification moat and the SRR program was helping revenue, but the economics were still far too weak. I pointed to the TTM operating margin of -176%, net margin of -138%, and FCF margin of -163.4% as evidence that the business had not yet translated that strategic position into durable cash generation. I also said I would only reconsider if revenue stayed above $20M for two straight quarters and gross margin moved materially above 7.5%, with a positive operating margin as the real inflection point.
Peer Comparison
| Company | Return Since Entry |
|---|---|
| RCAT (this call) | -41.5% |
| AVAV | -21.2% |
| DPRO | -15.7% |
| KTOS | -19.1% |
| ONDS | -22.6% |
Why It’s Working (Or Not)
Over this tracking window, following my Sell would have earned 41.5%, so the call has worked in the direction I expected. RCAT has fallen while the peer group I cited has also been mostly lower, which means the stock has not stood out as a relative strength story against that defense-drone set. The part of my thesis that has held up best is the idea that the market was still discounting the gap between strategic promise and actual cash economics. I have not seen anything in the price action that would make me abandon the original warning that the business needed a real margin inflection before the valuation case could improve.
What Could Still Prove Me Wrong
If RCAT can sustain quarterly revenue above $20M for two consecutive quarters and show gross margin moving materially above 7.5%, I would have to revisit the thesis. A positive operating margin would be the clearest sign that the company is finally converting the SRR ramp into durable earnings power. If the stock starts to recover while those operating metrics are still not improving, that would also challenge my view that the current valuation was ahead of the fundamentals.
The July 2026 Cohort
Other directional calls published the same month:
| Ticker | Rating | Entry | Latest | Stock Return | Signal Return | Verdict |
|---|---|---|---|---|---|---|
| NLST | Sell | $2.44 | $6.14 | +151.6% | -151.6% | Incorrect so far |
| BMNR | Sell | $17.74 | $23.96 | +35.1% | -35.1% | Incorrect so far |
| FTNT | Sell | $156.25 | $174.05 | +11.4% | -11.4% | Incorrect so far |
| RDW | Sell | $8.99 | $8.56 | -4.8% | +4.8% | Correct so far |
| QUBT | Sell | $7.43 | $6.82 | -8.2% | +8.2% | Correct so far |
| VSAT | Sell | $69.54 | $62.59 | -10.0% | +10.0% | Correct so far |
| UAN | Buy | $110.58 | $127.08 | +14.9% | +14.9% | Correct so far |
| TPL | Sell | $408.26 | $344.31 | -15.7% | +15.7% | Correct so far |
| TTWO | Sell | $247.62 | $206.16 | -16.7% | +16.7% | Correct so far |
| HUT | Sell | $98.33 | $71.58 | -27.2% | +27.2% | Correct so far |
| AMKR | Sell | $60.60 | $43.73 | -27.8% | +27.8% | Correct so far |
| MYRG | Sell | $391.51 | $275.21 | -29.7% | +29.7% | Correct so far |
| ONTO | Sell | $319.32 | $222.14 | -30.4% | +30.4% | Correct so far |
| MARA | Sell | $11.67 | $7.79 | -33.2% | +33.2% | Correct so far |
| MTZ | Sell | $380.63 | $180.96 | -52.5% | +52.5% | Correct so far |
| SMR | Strong Sell | $8.81 | $5.50 | -37.6% | +56.4% | Correct so far |
| CIFR | Sell | $21.85 | $9.13 | -58.2% | +58.2% | Correct so far |
| FLNC | Sell | $14.42 | $6.00 | -58.4% | +58.4% | Correct so far |
Sector Scorecard: Industrials
How are our Industrials calls doing overall, and where does RCAT sit among them?
| Peer call | Rating | Published | Signal return |
|---|---|---|---|
| BW | Sell | 2026-06-19 | +73.9% |
| SMR | Strong Sell | 2026-07-23 | +56.4% |
| MTZ | Sell | 2026-07-05 | +52.5% |
| MYRG | Sell | 2026-07-17 | +29.7% |
| JOBY | Sell | 2026-10-04 | +19.7% |
| FIX | Sell | 2026-10-07 | +19.5% |
| PL | Sell | 2026-09-18 | +16.5% |
| BA | Sell | 2026-08-24 | +8.6% |
We saw Industrials lead our directional books with 13 calls, a 92% hit rate, and a +24.4% average signal return, with BW +73.9% as the best call and CAR -16.1% as the worst. Communication Services also stood out at 100% hit rate and +16.4%, while Technology was the largest book at 24 calls and delivered a 79% hit rate with +11.3%; at the other end, Energy posted the lowest average signal return among the ranked sectors at +4.2%. Utilities and Consumer Cyclical were thin at 3 calls each, so we do not rank them as leaders or laggards, though both showed +16.1% and +13.1% average signal returns, respectively. Thin sectors not ranked also include Real Estate (2 calls) and Unclassified (2 calls).
Sector League Table
| Sector | Calls | Hit rate | Avg signal return | Best | Worst |
|---|---|---|---|---|---|
| Industrials | 13 | 92% | +24.4% | BW +73.9% | CAR -16.1% |
| Communication Services | 5 | 100% | +16.4% | LUMN +29.7% | GTN +4.4% |
| Utilities | 3 | 33% | +16.1% | FLNC +58.4% | TLN -8.3% |
| Consumer Cyclical | 3 | 100% | +13.1% | PENN +19.8% | RRGB +8.6% |
| Basic Materials | 4 | 75% | +12.3% | LAR +33.3% | USAR -2.1% |
| Technology | 24 | 79% | +11.3% | CIFR +58.2% | NLST -151.6% |
| Healthcare | 7 | 71% | +8.6% | CUE +29.7% | SDGR -37.4% |
| Financial Services | 4 | 75% | +8.1% | MARA +33.2% | BMNR -35.1% |
| Energy | 4 | 75% | +4.2% | TPL +15.7% | VNOM -9.6% |
| Real Estate* | 2 | 100% | +18.4% | SRG +33.4% | SKYH +3.4% |
| Unclassified* | 2 | 50% | +5.9% | NXE +18.0% | FISV -6.2% |
\* Fewer than 3 calls: not ranked.
Sector by Publish Month
| Sector | Jun 2026 | Jul 2026 | Aug 2026 | Sep 2026 | Oct 2026 |
|---|---|---|---|---|---|
| Technology | +40.9% (2) | -4.0% (7) | +17.5% (3) | +17.1% (6) | +10.3% (6) |
| Industrials | +73.9% (1) | +37.0% (5) | +6.9% (2) | +1.7% (3) | +19.6% (2) |
| Healthcare | -5.1% (1) | — | +7.1% (5) | +29.7% (1) | — |
| Communication Services | — | +16.7% (1) | +13.5% (2) | +8.8% (1) | +29.7% (1) |
| Financial Services | — | +8.5% (3) | — | — | +6.8% (1) |
| Basic Materials | — | +14.9% (1) | — | +33.3% (1) | +0.5% (2) |
| Energy | — | +15.7% (1) | -9.6% (1) | +5.0% (1) | +5.9% (1) |
| Consumer Cyclical | — | — | +13.1% (3) | — | — |
| Utilities | — | +58.4% (1) | -1.8% (1) | — | -8.3% (1) |
| Real Estate | +3.4% (1) | — | +33.4% (1) | — | — |
| Unclassified | — | — | +18.0% (1) | — | -6.2% (1) |
Each cell: average signal return to date of the calls published that month (calls in brackets). Signal return is direction-adjusted, so a positive number means our call is right.
Live LF0 scorecard: The Scorecard | Research Performance dashboard
Past performance does not guarantee future results. Nothing here is investment advice or a recommendation to buy or sell securities. Returns use LF0’s daily-close scorecard methodology.
Leave a Comment