Red Violet's (NASDAQ:RDVT) Returns On Capital Are Heading Higher

Simply Wall St.08-31

If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should keep an eye out for. Typically, we'll want to notice a trend of growing return on ...

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Typically, we'll want to notice a trend of growing return on ...</p>\n\n<a href=\"https://finance.yahoo.com/news/red-violets-nasdaq-rdvt-returns-140043101.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"EBIT","symbol_name":"Harbor AlphaEdge Small Cap Earners ETF","start_time":0,"source_url":"https://finance.yahoo.com/news/red-violets-nasdaq-rdvt-returns-140043101.html","article_id":"2463701052","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/94bcc5bcuvrJNKUdDP7UgA--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/58df37cadd48c6619bbe022c72dae85c"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2463701052","pubTimestamp":1725112843,"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should keep an eye out for. Typically, we'll want to notice a trend of growing return on capital employed  and alongside that, an expanding base of capital employed. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. So on that note, Red Violet  looks quite promising in regards to its trends of return on capital.Just to clarify if you're unsure, ROCE is a metric for evaluating how much pre-tax income  a company earns on the capital invested in its business. The formula for this calculation on Red Violet is:. Return on Capital Employed = Earnings Before Interest and Tax  ÷ . So, Red Violet has an ROCE of 6.6%.  Ultimately, that's a low return and it under-performs the Software industry average of 8.5%.Get in touch with us directly. Alternatively, email editorial-team ","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"EBIT":"Harbor AlphaEdge Small Cap Earners ETF","QLD":"纳指两倍做多ETF","BK4588":"碎股","LU2095319765.USD":"Natixis Thematics Subscription Economy R/A USD","BK4123":"调查和咨询服务","TQQQ":"纳指三倍做多ETF","LU2210150020.SGD":"Natixis Thematics Subscription Economy R/A SGD","LU2210149790.SGD":"Natixis Thematics Subscription Economy R/A SGD-H","PSQ":"纳指反向ETF","IE00BKPKM429.USD":"NEUBERGER BERMAN GLOBAL SUSTAINABLE EQUITY \"A\" (USD) ACC","BK4112":"金融交易所和数据","BK4023":"应用软件","QID":"纳指两倍做空ETF","BK4585":"ETF&股票定投概念","NDAQ":"纳斯达克OMX交易所","SQQQ":"纳指三倍做空ETF",".IXIC":"NASDAQ Composite","RDVT":"Red Violet, Inc."},"translate_title":"Red Violet（纳斯达克股票代码：RDVT）的资本回报率正在上升","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"RDVT":1,"EBIT":1,"NDAQ":1,".IXIC":1,"TQQQ":0.6,"SQQQ":0.6,"QLD":0.6,"QID":0.6,"PSQ":0.6,"NQmain":0.6,"MNQmain":0.6},"content_text":"If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should keep an eye out for. Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding base of capital employed. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. So on that note, Red Violet (NASDAQ:RDVT) looks quite promising in regards to its trends of return on capital. \n Understanding Return On Capital Employed (ROCE) \n Just to clarify if you're unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. The formula for this calculation on Red Violet is: \n Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) \n0.066 = US$5.9m ÷ (US$93m - US$3.7m) (Based on the trailing twelve months to June 2024).\n So, Red Violet has an ROCE of 6.6%.  Ultimately, that's a low return and it under-performs the Software industry average of 8.5%. \n Check out our latest analysis for Red Violet \n\n\n\n  NasdaqCM:RDVT Return on Capital Employed August 31st 2024\n \n\n Above you can see how the current ROCE for Red Violet compares to its prior returns on capital, but there's only so much you can tell from the past. If you're interested, you can view the analysts predictions in our free analyst report for Red Violet . \n The Trend Of ROCE \n We're delighted to see that Red Violet is reaping rewards from its investments and is now generating some pre-tax profits. Shareholders would no doubt be pleased with this because the business was loss-making five years ago but is is now generating 6.6% on its capital. And unsurprisingly, like most companies trying to break into the black, Red Violet is utilizing 136% more capital than it was five years ago. We like this trend, because it tells us the company has profitable reinvestment opportunities available to it, and if it continues going forward that can lead to a multi-bagger performance. \n What We Can Learn From Red Violet's ROCE \n Overall, Red Violet gets a big tick from us thanks in most part to the fact that it is now profitable and is reinvesting in its business. And with the stock having performed exceptionally well over the last five years, these patterns are being accounted for by investors. So given the stock has proven it has promising trends, it's worth researching the company further to see if these trends are likely to persist. \n On a final note, we've found   1 warning sign for Red Violet  that we think you should be aware of. \n While Red Violet may not currently earn the highest returns, we've compiled a list of companies that currently earn more than 25% return on equity. Check out this free list here. \nHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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. 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