Did Red Violet's (NASDAQ:RDVT) Share Price Deserve to Gain 16%?

There's no doubt that investing in the stock market is a truly brilliant way to build wealth. But not every stock you buy will perform as well as the overall market. Unfortunately for shareholders, while the Red Violet, Inc. (NASDAQ:RDVT) share price is up 16% in the last year, that falls short of the market return. We'll need to follow Red Violet for a while to get a better sense of its share price trend, since it hasn't been listed for particularly long.

See our latest analysis for Red Violet

Because Red Violet made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

Over the last twelve months, Red Violet's revenue grew by 33%. We respect that sort of growth, no doubt. The share price gain of 16% seems pretty muted, considering the growth. Arguably, the market (previously) expected stronger growth from the company. However, if you can reasonably expect profits in the next few years, this stock might belong on your watchlist.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

Take a more thorough look at Red Violet's financial health with this free report on its balance sheet.

A Different Perspective

Red Violet shareholders have gained 16% for the year. While it's always nice to make a profit on the stock market, we do note that the TSR was no better than the broader market return of about 27%. The last three months haven't been great for shareholder returns, since the share price has trailed the market by 8.3% in the last three months. But a weak quarter certainly doesn't diminish the longer-term achievements of the business. It's always interesting to track share price performance over the longer term. But to understand Red Violet better, we need to consider many other factors. Take risks, for example - Red Violet has 2 warning signs we think you should be aware of.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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