Value
2.6/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 1.4 |
| P/S | 1.1 |
| Fwd P/E | 2.5 |
| PEG | 4.9 |
| Analyst target | 3.0 |
- ▸Forward P/E: 46.8x
- ▸PEG: 1.62
- ▸Expensive valuation
RDVT · Why this verdict
Why Red Violet (RDVT) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictHOLD
Overall score6.3/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Red Violet's strong earnings-beat streak supports its growth story, but the stock's rich valuation, high leverage, notable insider selling, and an already-negative asymmetry reading suggest the near-term risk/reward has turned unfavorable after running past its analyst target.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Red Violet trades at a rich valuation — a 40.3x forward P/E and a PEG ratio of 1.61 — meaning the market is already pricing in continued strong growth, leaving little room for error. Valuation breakdown | The PEG ratio should stay near or below 1.6 as earnings growth catches up to the multiple, rather than the multiple compressing. | ↓Deteriorating |
| CounterA PEG above 1.5 combined with a 40x forward P/E leaves the stock vulnerable to a sharp de-rating if growth decelerates even modestly. | ||
The engine flags a leverage penalty from a debt-to-equity ratio of 2.6, adding balance-sheet risk on top of an already rich valuation and reducing the margin of safety if growth slows. Bear case | Debt-to-equity should decline from 2.6x or at minimum not increase further over the next several quarters. | ↓Deteriorating |
| CounterIf the debt funds high-return growth investments, leverage may be a rational and value-accretive choice rather than a red flag. | ||
Insiders have sold notably — $2.64 million over 90 days, 0.286% of market cap — a bearish signal that compounds the valuation and asymmetry concerns. Insider breakdown | Insider selling should moderate from current levels rather than accelerate, signaling insiders still see value in the shares. | →Stable |
| CounterAt a company with a concentrated founder/insider ownership base, routine diversification sales are common and may carry limited signal about the business outlook. | ||
The company has beaten estimates in 3 of its last 4 quarters with an average surprise of 38.1%, and the next report is 32 days away, providing a concrete near-term catalyst for the bull case. Avg surprise pct | The beat streak should continue at the next print with a positive surprise. | ↑Improving |
| CounterSuch a large average surprise raises the bar for future quarters and increases the risk that a smaller-than-usual beat is read by the market as a disappointment. | ||
The V9 engine shows the stock has already run 17.6% past its analyst-target take-profit, turning the asymmetry ratio negative (-1.17) and signaling that the near-term risk/reward has become unfavorable at current prices. Estimated upside | The asymmetry ratio should recover above 1.5 through either a price pullback or an analyst target upgrade before this becomes a fresh buy. | →Stable |
| CounterContinued earnings beats could prompt analysts to raise price targets faster than the stock appreciates, restoring favorable asymmetry without any price decline. | ||
Red Violet trades at a rich valuation — a 40.3x forward P/E and a PEG ratio of 1.61 — meaning the market is already pricing in continued strong growth, leaving little room for error.
↓DeterioratingValuation breakdown
- Expectation
- The PEG ratio should stay near or below 1.6 as earnings growth catches up to the multiple, rather than the multiple compressing.
CounterA PEG above 1.5 combined with a 40x forward P/E leaves the stock vulnerable to a sharp de-rating if growth decelerates even modestly.
The engine flags a leverage penalty from a debt-to-equity ratio of 2.6, adding balance-sheet risk on top of an already rich valuation and reducing the margin of safety if growth slows.
↓DeterioratingBear case
- Expectation
- Debt-to-equity should decline from 2.6x or at minimum not increase further over the next several quarters.
CounterIf the debt funds high-return growth investments, leverage may be a rational and value-accretive choice rather than a red flag.
Insiders have sold notably — $2.64 million over 90 days, 0.286% of market cap — a bearish signal that compounds the valuation and asymmetry concerns.
→StableInsider breakdown
- Expectation
- Insider selling should moderate from current levels rather than accelerate, signaling insiders still see value in the shares.
CounterAt a company with a concentrated founder/insider ownership base, routine diversification sales are common and may carry limited signal about the business outlook.
The company has beaten estimates in 3 of its last 4 quarters with an average surprise of 38.1%, and the next report is 32 days away, providing a concrete near-term catalyst for the bull case.
↑ImprovingAvg surprise pct
- Expectation
- The beat streak should continue at the next print with a positive surprise.
CounterSuch a large average surprise raises the bar for future quarters and increases the risk that a smaller-than-usual beat is read by the market as a disappointment.
The V9 engine shows the stock has already run 17.6% past its analyst-target take-profit, turning the asymmetry ratio negative (-1.17) and signaling that the near-term risk/reward has become unfavorable at current prices.
→StableEstimated upside
- Expectation
- The asymmetry ratio should recover above 1.5 through either a price pullback or an analyst target upgrade before this becomes a fresh buy.
CounterContinued earnings beats could prompt analysts to raise price targets faster than the stock appreciates, restoring favorable asymmetry without any price decline.
Per-dimension breakdown
Quality
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 5.3 |
| ROA | 6.7 |
| Gross margin | 10.0 |
| Op margin | 9.2 |
| Net margin | 8.3 |
| Current ratio | 5.0 |
| FCF quality | 6.2 |
| Moat | 8.4 |
| Rule of 40 | 5.5 |
| Piotroski F | 10.0 |
- ▸Strong margins: 17%
- ▸Wide economic moat
- ▸Compounder quality: strong returns + growth
- ▸Strong Piotroski F-Score: 9/9
Growth
9.1/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 8.2 |
| EPS growth | 10.0 |
- ▸Strong growth: 23% YoY
Momentum
7.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 4.5 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 7.8 |
| Analyst rating | 7.1 |
| Price target | 5.4 |
- ▸LLM news sentiment: +0.55 (n=2)
- ▸Light analyst coverage (4.0) — signal dampened
Insider
5.4/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.5 |
| holder change | 5.8 |
| notable moves | 5.0 |
- ▸Insider buying (low materiality) — $142,980 (0.011% of mkt cap)
Peer rank
6.0/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 1.1 |
| quality rank | 6.5 |
| growth rank | 7.6 |
- ▸Conservative debt levels
Technical
3.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.7 |
| support resistance | 0.7 |
| 52w position | 9.8 |
Risk (lower is worse)
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.9 |
| days to cover | 7.3 |
| volatility | 4.0 |
| put call | 8.5 |
| implied vol | 1.9 |
| max pain risk | 3.0 |
| beta | 4.1 |
| debt equity | 9.9 |
- ▸High IV: 68%
- ▸Above max pain $40
Catalyst
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| news activity | 6.0 |
- ▸Perfect beat streak: 4Q
- ▸Earnings in 6 days
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more.
Engine technical detail
verdict_path:
L4:PATH_F_HOLDPassed (5)
- MOMENTUM:7.8>=5.5
- INSIDER:OK
- 8K:CLEAN
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- ASYMMETRY:-1.1=NEGATIVE
- EARNINGS_PROXIMITY:6d<=7d
Warning (0)
none
Reward-to-Risk
-1.10
Upside
-12.8%
Downside
11.7%
Sizing output
AVOID
SetupBreakout — Golden cross, above all MAs, RSI 56, MACD bullish
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — Beta 1.78>1.3, MCap $1.3B<$5B
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: MOMENTUM:7.8>=5.5. Top dim: Growth at 9.1; weakest: Value at 2.6. No conviction either direction.
The strongest dimensions are Growth at 9.1, Momentum at 7.8, and Quality at 7.5; the weakest are Value at 2.6, Technical at 3.7, and Insider at 5.4. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of -1.10 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Rich Valuation Risk
Trip ifForward P/E compresses below 25x while PEG ratio stays above 2.0.
- P2Earnings Beat Streak
Trip ifEPS surprise falls below 0% at the next earnings report.
- P3Target Reached Negative Asymmetry
Trip ifAsymmetry ratio stays below -1.0 for 2 consecutive months.
- P4Leverage Penalty Risk
Trip ifDebt-to-equity ratio rises above 3.5x from the current 2.6x.
- P5Notable Insider Selling
Trip ifNet insider selling exceeds $5 million over a rolling 90-day period.