Rapid7 Inc. Common Stock (RPD)

FairStock Score: 62/100 — STEADY

Key Financials

Strengths

• Generates $123 million in annual free cash flow (32.4% yield on market cap)
• High return on equity of 27.1% demonstrating efficient capital deployment

Concerns

• High leverage at 6.26x debt-to-equity increases financial risk and interest expense burden
• Altman Z-Score of -0.4 places it in the financial distress zone—elevated bankruptcy risk

AI Analysis

Rapid7 Inc. Common Stock is a micro-cap technology company valued at $381 million. The business generates $860 million in annual revenue with a 0.4% net margin and $123 million in free cash flow. From a quality standpoint, Rapid7 shows distressed Altman Z-Score of -0.4 warrants caution and strong 27% ROE. On valuation, the stock is reasonably priced at 16.1x earnings, with trades above its Graham Number with a negative 32% margin. Growth dynamics show revenue growing at 0.5% and profit growth of 311.3%. Our composite FairStock Score of 62/100 reflects above-average fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Improving fundamentals and sector tailwinds could drive meaningful earnings growth, compressing the effective multiple for patient investors. With $123 million in annual free cash flow (32.4% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

Elevated leverage at 6.3x D/E means rising interest rates or revenue weakness could strain debt covenants and force asset sales at distressed prices. 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