Value
3.2/10data confidence 67%| Component | Sub-score |
|---|---|
| P/E | 1.5 |
| P/S | 3.2 |
| Fwd P/E | 2.7 |
| PEG | 4.8 |
- ▸Forward P/E: 42.3x
- ▸PEG: 1.69
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.
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VerdictHOLD
Overall score5.7/10
ConfidenceMEDIUM
MacroNEUTRAL
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. | →Stable |
| 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. | →Stable |
| 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. | →Stable |
| 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.
→StableValuation 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.
→StableBear 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.
→StableAvg 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.
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.
Per-dimension breakdown
Quality
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 4.8 |
| ROA | 5.9 |
| Gross margin | 10.0 |
| Op margin | 8.8 |
| Net margin | 7.5 |
| Current ratio | 5.0 |
| FCF quality | 6.4 |
| Moat | 8.4 |
| Rule of 40 | 5.5 |
| Piotroski F | 10.0 |
- ▸Wide economic moat
- ▸Compounder quality: strong returns + growth
- ▸Strong Piotroski F-Score: 9/9
Growth
7.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 6.9 |
| EPS growth | 7.0 |
Momentum
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.1 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 3.1 |
- ▸Overbought (RSI 78)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 6.4 |
| Price target | 4.4 |
| erm sentiment | 5.0 |
- ▸Light analyst coverage (2.0) — signal dampened
Insider
4.0/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 3.0 |
| insider conviction | 2.0 |
| holder change | 6.9 |
- ▸Notable insider selling — $2,641,830 (0.273% of mkt cap)
Peer rank
5.6/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 1.3 |
| quality rank | 6.7 |
| growth rank | 5.9 |
- ▸Conservative debt levels
Technical
4.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.6 |
| support resistance | 1.8 |
| 52w position | 9.0 |
| gap | 6.0 |
Risk (lower is worse)
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.7 |
| days to cover | 6.1 |
| volatility | 1.8 |
| put call | 10.0 |
| implied vol | 3.3 |
| max pain risk | 3.0 |
| beta | 3.9 |
| debt equity | 9.9 |
- ▸Above max pain $30
Catalyst
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
- ▸Strong earnings: 3B/0M
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more.
Engine technical detail
verdict_path:
L4:PATH_F_HOLDPassed (6)
- MOMENTUM:7.2>=5.5
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:29d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-1.2=NEGATIVE
Warning (1)
- INSIDER:0.27%=MODERATE
Reward-to-Risk
-1.23
Upside
-18.4%
Downside
15.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeCatalyst-Driven — Earnings in 29d with 3/4 beat streak
SuitabilityAggressive — Beta 1.83>1.3, MCap $1.0B<$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:7.2>=5.5. Top dim: Catalyst at 7.5; weakest: Value at 3.2. No conviction either direction.
The strongest dimensions are Catalyst at 7.5, Quality at 7.2, and Momentum at 7.2; the weakest are Value at 3.2, Insider at 4.0, and Technical at 4.6. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -1.23 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.