RVLV

RVLV is executing well after a cyclical earnings trough. FY2025 revenue rose 8.5% to $1.23B — the best growth since the 2022 peak — while the quality of those dollars improved sharply: gross margin stepped up for a third straight year (51.9%→52.5%→53.5%), operating income jumped 44.4% to $74.3M, and net income grew 24.5% to $61.7M. The cash story is the standout — operating cash flow more than doubled to $59.4M and management-cited free cash flow rose to $46.2M from $18.0M, with adjusted EBITDA up to $93.8M from $69.5M. Active customers grew to 2,841K from 2,660K, so the top line is being driven by real demand, not just price. The balance sheet is pristine: $292M cash against $252M of total liabilities, 0.49x liabilities/equity, and no meaningful debt — roughly 17% of the market cap sits in cash.

Valuation is full but not stretched for this quality and trajectory. At $23.61 the stock trades at 27.5x trailing EPS of $0.86 and just 1.4x sales; backing out net cash, EV/EBITDA is roughly 15x. Against 24%+ EPS growth that puts the PEG near 1, which is reasonable for a profitable, founder-led, cash-generative grower with a 12% ROE and an asset-light model (only $11.4M capex). This is a 'fairly-priced compounder' setup rather than a deep-value one — the buy case rests on continued margin expansion and FCF conversion, both of which the FY2025 print delivered.