Red Violet Inc. Common Stock (RDVT)

FairStock Score: 59/100 — STEADY

Key Financials

Strengths

• Generates $9 million in annual free cash flow (1.6% yield on market cap)
• Solid return on equity of 14.0% above cost of capital
• Conservative balance sheet with debt-to-equity of just 0.03, providing financial flexibility
• Altman Z-Score of 30.5 confirms minimal bankruptcy risk and strong solvency
• Revenue growth of 19.6% demonstrates strong top-line momentum

Concerns

• Trades significantly above Graham Number ($12) with negative 220% margin of safety—limited downside protection

AI Analysis

Red Violet Inc. Common Stock is a micro-cap technology company valued at $546 million. The business generates $90 million in annual revenue with a 3.1% net margin and $9 million in free cash flow. From a quality standpoint, Red shows Altman Z-Score of 30.5 confirms fortress-level solvency and adequate 14% ROE. On valuation, the stock is commanding a steep 41.9x multiple, with trades far above its Graham Number ($12) with no margin of safety. Growth dynamics show revenue growing at 19.6% and profit growth of 226.2%. Our composite FairStock Score of 59/100 reflects mixed fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Red's 20% revenue growth trajectory could accelerate as it captures additional market share in the technology sector. With $9 million in annual free cash flow (1.6% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

At 42x earnings, any growth disappointment triggers rapid multiple compression—a 20% earnings miss plus multiple contraction to 20x implies 40%+ downside. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer