Red Violet, Inc. (NASDAQ: RDVT)

Sector: Technology Industry: Software - Application CIK: 0001720116
Market Cap 729.79 Mn
P/B 7.17
P/E 65.15
P/S 8.44
ROIC (Qtr) 9.93
Div Yield % 0.57
Rev 1y % (Qtr) 21.13
Total Debt (Qtr) 2.86 Mn
Debt/Equity (Qtr) 0.03

About

Price action

Investment thesis

Bull case

  • Strong operating cash flow of 29.35M provides robust 10.26x coverage of total debt 2.86M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 45.35M provide 112.54x coverage of short-term debt 403000, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 68.09M provides 23.79x coverage of total debt 2.86M, indicating robust asset backing and low credit risk.
  • Operating cash flow of 29.35M provides exceptional 28.44x coverage of interest expenses 1.03M, showing strong debt service capability.
  • Robust free cash flow of 18.94M exceeds capital expenditure of 10.41M by 1.82x, indicating strong organic growth funding capability.

Bear case

  • Operating cash flow of 29.35M barely covers its investment activities of (10.41M), with a coverage ratio of -2.82, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • The company's operating cash flow of 29.35M shows concerning coverage of stock compensation expenses of 6.62M, with a 4.43 ratio indicating potential earnings quality issues.
  • Operating earnings of 14.34M show weak coverage of depreciation charges of 10.38M, with a 1.38 ratio indicating high capital intensity and potential reinvestment needs.
  • Operating cash flow of 29.35M is outpaced by equity issuance of (653000) (-44.95 ratio), indicating concerning reliance on equity markets for funding operations.
  • Tangible assets of 68.09M provide limited backing for working capital of 51.10M, which is 1.33x, suggesting increased operational risk in market downturns.

Peer comparison

Companies in the Software - Application
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 SAP Sap Se 288.31 Bn 34.60 6.72 10.73 Bn
2 CRM Salesforce, Inc. 248.32 Bn 34.38 6.16 11.14 Bn
3 SHOP Shopify Inc. 212.27 Bn 119.19 19.85 1.12 Bn
4 INTU Intuit Inc. 180.73 Bn 43.89 9.30 6.78 Bn
5 UBER Uber Technologies, Inc 178.38 Bn 10.72 3.60 12.19 Bn
6 NOW ServiceNow, Inc. 146.98 Bn 84.91 11.60 2.40 Bn
7 ADBE Adobe Inc. 144.48 Bn 20.77 6.23 6.64 Bn
8 ADP Automatic Data Processing Inc 108.20 Bn 26.16 5.18 9.77 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 6.19 2.65
EV to Cash from Ops. EV/CFO 23.64 13.37
EV to Debt EV to Debt 242.44 57.69
EV to EBIT EV/EBIT 48.38 19.12
EV to EBITDA EV/EBITDA 31.13 15.00
EV to Free Cash Flow [EV/FCF] EV/FCF 36.64 14.69
EV to Market Cap EV to Market Cap 0.95 -92.28
EV to Revenue EV/Rev 8.03 4.60
Price to Book Value [P/B] P/B 7.17 4.26
Price to Earnings [P/E] P/E 65.15 -136.90
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 -3.95
Dividend Payout Ratio % Div Payout % (Qtr) 37.00 4.25
Dividend per Basic Share Div per Share (Qtr) 0.30 0.15
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 22.22 2.52
Interest Coverage Int. cover (Qtr) 13.90 -52.32
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -10.83 -259.78
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 26.87 9,763.58
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 1.61
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 113.08 -263.15
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 39.80 56.46
EBIT Growth (1y) % EBIT 1y % (Qtr) 59.00 -225.15
EBT Growth (1y) % EBT 1y % (Qtr) 64.87 -86.10
EPS Growth (1y) % EPS 1y % (Qtr) 125.00 123.84
FCF Growth (1y) % FCF 1y % (Qtr) 56.81 -36.82
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 27.01 95.08
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.77 0.58
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.02
Cash Ratio Cash Ratio (Qtr) 6.56 3.75
Current Ratio Curr Ratio (Qtr) 8.40 8.16
Debt to Equity Ratio Debt/Equity (Qtr) 0.03 0.17
Interest Cover Ratio Int Coverage (Qtr) 13.90 -52.32
Times Interest Earned Times Interest Earned (Qtr) 13.90 -52.32
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 28.60 -100.06
EBIT Margin % EBIT Margin % (Qtr) 16.59 -164.24
EBT Margin % EBT Margin % (Qtr) 15.40 -116.94
Gross Margin % Gross Margin % (Qtr) 83.50 58.20
Net Profit Margin % Net Margin % (Qtr) 13.00 -121.65