Financial Survey: Red Violet (NASDAQ:RDVT) and Microsoft (NASDAQ:MSFT)

Microsoft (NASDAQ:MSFT) and Red Violet (NASDAQ:RDVT) are both computer and technology companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, institutional ownership, profitability, valuation, analyst recommendations, risk and dividends.

Earnings and Valuation

This table compares Microsoft and Red Violet’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Microsoft $125.84 billion 8.32 $16.57 billion $4.75 28.76
Red Violet $16.30 million 7.98 -$6.87 million N/A N/A

Microsoft has higher revenue and earnings than Red Violet.

Dividends

Microsoft pays an annual dividend of $1.84 per share and has a dividend yield of 1.3%. Red Violet does not pay a dividend. Microsoft pays out 38.7% of its earnings in the form of a dividend. Microsoft has raised its dividend for 15 consecutive years.

Analyst Recommendations

This is a breakdown of recent ratings for Microsoft and Red Violet, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Microsoft 1 1 25 2 2.97
Red Violet 0 0 0 0 N/A

Microsoft currently has a consensus target price of $148.19, suggesting a potential upside of 8.47%. Given Microsoft’s higher probable upside, equities analysts clearly believe Microsoft is more favorable than Red Violet.

Insider & Institutional Ownership

72.1% of Microsoft shares are held by institutional investors. Comparatively, 14.2% of Red Violet shares are held by institutional investors. 1.4% of Microsoft shares are held by insiders. Comparatively, 4.3% of Red Violet shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Microsoft and Red Violet’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Microsoft 31.18% 40.48% 14.17%
Red Violet -32.93% -16.62% -14.77%

Volatility and Risk

Microsoft has a beta of 1.21, indicating that its share price is 21% more volatile than the S&P 500. Comparatively, Red Violet has a beta of -0.21, indicating that its share price is 121% less volatile than the S&P 500.

Summary

Microsoft beats Red Violet on 13 of the 15 factors compared between the two stocks.

About Microsoft

Microsoft Corporation develops, licenses, and supports software, services, devices, and solutions worldwide. Its company's Productivity and Business Processes segment offers Office 365 commercial products and services, such as Office, Exchange, SharePoint, Skype for Business, Microsoft Teams, and related Client Access Licenses (CALs); Office 365 consumer services, including Skype, Outlook.com, and OneDrive; LinkedIn online professional network; and Dynamics business solutions comprising financial management, enterprise resource planning, customer relationship management, supply chain management, and analytics applications for small and medium businesses, large organizations, and divisions of enterprises. The company's Intelligent Cloud segment licenses server products and cloud services, such as SQL Server, Windows Server, Visual Studio, System Center, and related CALs, as well as Azure, a cloud platform; and enterprise services, including premier support and Microsoft consulting services to assist customers in developing, deploying, and managing Microsoft server and desktop solutions, as well as provides training and certification to developers and IT professionals. Its More Personal Computing segment offers Windows OEM, volume, and other non-volume licensing of the Windows operating system; patent licensing, Windows Internet of Things, and MSN display advertising; devices comprising Surface, PC accessories, and other intelligent devices; Xbox hardware and software and services; and Bing and Bing Ads search advertising. It markets its products through original equipment manufacturers, distributors, and resellers; and online and Microsoft retail stores. Microsoft Corporation has collaboration with E.ON, NIIT Technologies Ltd., and CUNA Mutual Group; strategic alliance with Nielsen Holdings plc and PAREXEL International Corp.; and a strategic collaboration with Mastercard Incorporated. The company was founded in 1975 and is headquartered in Redmond, Washington.

About Red Violet

Red Violet, Inc., a software and services company, specializes in big data analysis providing cloud-based mission-critical information solutions to enterprises in various industries in the United States. Its proprietary platform includes CORE, a cloud-based technology platform, which serves various industries within risk management. The company serves various industries, including law enforcement, government, financial services, insurance, and corporate risk for identity verification, risk assessment, fraud detection, and compliance. It markets its products and services through value-added distributors, resellers, and strategic partners; and trade shows and seminars, advertising, public relations, distribution of sales literature, and product specifications and ongoing communication with prospective clients, distributors, resellers, strategic partners, and installed base of current clients, as well as through direct sales. The company was incorporated in 2017 and is headquartered in Boca Raton, Florida.

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