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ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. Red Violet's annualized return on capital (ROC %) for the quarter that ended in Mar. 2026 was 26.07%.
As of today (2026-07-21), Red Violet's WACC % is 14.30%. Red Violet's ROC % is 20.61% (calculated using TTM income statement data).
Red Violet generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
Red Violet (FRA:2KH) ROC % Explanation
ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.
There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.
Why is ROC % important?
Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.
As of today, Red Violet's WACC % is 14.30%. Red Violet's ROC % is 20.61% (calculated using TTM income statement data).
Red Violet generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
Be Aware
Like ROE % and ROA %, ROC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.
Red Violet ROC % Related Terms
Red Violet ROC % Historical Data
* Premium members only.
The historical data trend for Red Violet's ROC % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Note:
The Operating Income data used here is four times the quarterly (Mar. 2026) data.
The tax rate is limited to between 0% and 100%.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Red Violet (FRA:2KH) has a ROC % of 26.07% as of Mar. 2026. Return on capital is the ratio of current-period net income to average two-period capital. View historical data on Red Violet and its competitors.
Is Red Violet's ROC % too high?
Red Violet's current ROC % is 26.07%. The Software industry median ROC % is 3.13. Red Violet's value of 26.07% is 732.9% above this industry median. Overall, Red Violet has a GF Score™ of 69/100 and is considered Significantly Overvalued, reflecting its overall financial health beyond just this single metric.
How does Red Violet's ROC % compare to GTM and MITK?
Red Violet's ROC % of 26.07% can be compared against companies in the Software industry. The industry median ROC % is 3.13. Red Violet's value of 26.07% is 732.9% above this benchmark. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good ROC % for a Software company?
The median ROC % among Software companies is 3.13, based on 2,831 companies in the industry. Companies in the top quartile (top 25%) have a ROC % significantly above this median, while those in the bottom quartile fall well below. However, ROC % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Red Violet's current ROC % of 26.07% is 732.9% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high ROC % mean?
A high ROC % can signal that a stock is expensive relative to its fundamentals. Return on capital is the ratio of current-period net income to average two-period capital. View historical data on Red Violet and its competitors. For the Software industry, the median ROC % is 3.13 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Red Violet's current ROC % is 26.07%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Red Violet stock overvalued right now?
Based on GuruFocus' analysis, Red Violet (FRA:2KH) is currently considered Significantly Overvalued. The stock's GF Value™ is €34.53, compared to a current price of €55.00 — trading 59.3% above its estimated fair value. The current ROC % is 26.07% and 732.9% above the Software industry median of 3.13. Red Violet's overall GF Score™ is 69/100 with 4 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is ROC % calculated?
ROC % is calculated from a company's financial statements. For Red Violet (FRA:2KH), the current ROC % is 26.07% as of Mar. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Red Violet (FRA:2KH) Overvalued in 2026?
Based on GuruFocus' analysis, Red Violet stock appears to be overvalued.
The current stock price of €55.00 is trading 59.3% above its estimated GF Value™ of €34.53.
GuruFocus considers Red Violet to be Significantly Overvalued.
Key valuation signals for FRA:2KH:
ROC %: 26.07%
GF Value™: €34.53 vs. price of €55.00 (59.3% above fair value)
Industry Position: 732.9% above the Software median
No single metric tells the full story. See the FRA:2KH stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Red Violet Inc builds proprietary technologies and applies analytical capabilities to deliver identity intelligence. The company's solutions enable the real-time identification and location of people, businesses, assets, and their interrelationships. These solutions are used for purposes including identity verification, risk mitigation, due diligence, fraud detection and prevention, regulatory compliance, and customer acquisition. Its cloud-native, AI-enabled identity intelligence platform, CORE, is purpose-built for the enterprise, yet flexible enough for organizations of all sizes, bringing clarity to massive datasets by transforming data into intelligence. The company generates substantially all of its revenue from licensing its solutions.
69GF Score
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ROC % is just one metric. See GF Value™, 30-year financials, guru trades, warning signs, and more.
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