Contrasting Red Violet (NASDAQ:RDVT) & LegalZoom.com (NASDAQ:LZ)

LegalZoom.com (NASDAQ:LZ) and Red Violet (NASDAQ:RDVT) are both small-cap industrials companies, but which is the better stock? We will compare the two companies based on the strength of their risk, analyst recommendations, dividends, institutional ownership, earnings, valuation and profitability.

Volatility and Risk

LegalZoom.com has a beta of 1.2, meaning that its stock price is 20% more volatile than the S&P 500. Comparatively, Red Violet has a beta of 1.78, meaning that its stock price is 78% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings for LegalZoom.com and Red Violet, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
LegalZoom.com	3	5	0	0	1.62
Red Violet	0	0	5	1	3.17

LegalZoom.com presently has a consensus target price of $7.30, suggesting a potential upside of 27.40%. Red Violet has a consensus target price of $83.50, suggesting a potential upside of 4.05%. Given LegalZoom.com’s higher possible upside, research analysts plainly believe LegalZoom.com is more favorable than Red Violet.

Valuation and Earnings

This table compares LegalZoom.com and Red Violet”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
LegalZoom.com	$756.04 million	1.30	$15.43 million	$0.09	63.67
Red Violet	$90.25 million	14.27	$13.15 million	$1.12	71.65

LegalZoom.com has higher revenue and earnings than Red Violet. LegalZoom.com is trading at a lower price-to-earnings ratio than Red Violet, indicating that it is currently the more affordable of the two stocks.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
LegalZoom.com	2.13%	15.83%	5.08%
Red Violet	16.54%	16.12%	14.77%

Institutional & Insider Ownership

82.0% of LegalZoom.com shares are owned by institutional investors. Comparatively, 63.6% of Red Violet shares are owned by institutional investors. 7.4% of LegalZoom.com shares are owned by insiders. Comparatively, 8.9% of Red Violet shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

Red Violet beats LegalZoom.com on 11 of the 15 factors compared between the two stocks.

About LegalZoom.com

LegalZoom.com, Inc., together with its subsidiaries, operates an online platform that supports the legal, compliance, and business management needs of small businesses and consumers in the United States. The company’s platform offers business formation products, such as limited liability company, incorporation of C and S corporations, nonprofit formations, doing-business-as, corporate changes and filings, business licenses, legal forms, and beneficial ownership information reports; intellectual property products consisting of trademark and patent applications, and copyright registrations; and tax services, including business and personal tax preparations. It also provides consumer, estate planning, and other services comprising last will and testament, living will, living trust, power of attorney, and name change. In addition, the company offers subscriptions services, including registered agent, compliance, attorney advice, tax advice and preparation, eSignature, virtual mail and check deposit services, trademark monitoring, and estate planning bundle. The company was incorporated in 1999 and is headquartered in Mountain View, California.

About Red Violet

Red Violet, Inc., a software and services company, specializes in proprietary technologies and applying analytical capabilities to deliver identity intelligence in the United States. It offers idiCORE, an investigative solution used to address various organizational challenges, which include due diligence, risk mitigation, identity authentication, fraud detection and prevention, customer acquisition, and regulatory compliance; and FOREWARN, an app-based solution that provides instant knowledge before face-to-face engagement with a consumer, as well as helps professionals to identify and mitigate risk. The company serves financial services, insurance, healthcare, retail, telecommunication companies, law enforcement and government agencies, collections, law, corporate security, and investigative firms. 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 customers, distributors, resellers, strategic partners, and installed base of current customers, as well as through direct sales. The company was incorporated in 2017 and is headquartered in Boca Raton, Florida.