Rambus Inc. Common Stock (RMBS)

FairStock Score: 48/100 — MIXED

Key Financials

Strengths

• Generates $251 million in annual free cash flow (1.7% yield on market cap)
• Solid return on equity of 18.6% above cost of capital
• Conservative balance sheet with debt-to-equity of just 0.02, providing financial flexibility
• Altman Z-Score of 54.7 confirms minimal bankruptcy risk and strong solvency
• Revenue growth of 18.1% demonstrates strong top-line momentum

Concerns

• Trades significantly above Graham Number ($25) with negative 456% margin of safety—limited downside protection

AI Analysis

Rambus Inc. Common Stock is a mid-cap technology company valued at $14.8 billion. The business generates $708 million in annual revenue with a 9.0% net margin and $251 million in free cash flow. From a quality standpoint, Rambus shows Altman Z-Score of 54.7 confirms fortress-level solvency and adequate 19% ROE. On valuation, the stock is commanding a steep 65.3x multiple, with trades far above its Graham Number ($25) with no margin of safety. Growth dynamics show revenue growing at 18.1% and profit growth of 2.6%. Our composite FairStock Score of 48/100 reflects mixed fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Rambus's 18% revenue growth trajectory could accelerate as it captures additional market share in the technology sector. With $251 million in annual free cash flow (1.7% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

At 65x 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