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Verdict
Quantitative factor alignment verified for current market regime.
Quant Score
Rank
#2306
Positioning
Market Dominance
Services
Business Services
$8M
Mark D. Walker
Direct Digital Holdings, Inc. operates as an end-to-end full-service programmatic advertising platform. It serves various industry verticals, such as travel, healthcare, education, financial services, consumer products, etc. with focus on small- and mid-sized businesses. The company was founded in 2018 and is headquartered in Houston, Texas.
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X-AXIS: EV/EBITDA (LOWER = CHEAPER) | Y-AXIS: ROE (HIGHER = ELITE) | RED CIRCLE = DRCT ANALYSIS TARGET
| Stock | Rating | Score▼ | Quality | Value | Momentum | P/E | EV/EBITDA | ROE | ROA | Gross Mgn | Op Mgn | Net Mgn | Rev Growth | Div Yield | D/E | Mkt Cap | AUDIT |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
$YALA Yalla Group Ltd | 75 | 89 | 99 | 80 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$GRVY GRAVITY Co., Ltd. | 75 | 82 | 96 | 71 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$ISSC INNOVATIVE SOLUTIONS & SUPPORT INC | 73 | 81 | 88 | 94 | 25.0x | 14.1x | 17.1% | 10.3% | 35.5% | 14.6% | 10.1% | 105.2% | 0.0% | 41.0x | $244M | VS | |
$AER AerCap Holdings N.V. | 72 | 60 | 87 | 84 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$HCSG HEALTHCARE SERVICES GROUP INC | 72 | 74 | 88 | 88 | 7.1x | 6.1x | 28.9% | 20.8% | 20.8% | 9.9% | 9.3% | 8.5% | 0.0% | 1.0x | $1.2B | VS | |
$LQDT LIQUIDITY SERVICES INC | 72 | 90 | 88 | 68 | 24.9x | 14.3x | 14.1% | 8.3% | 45.7% | 8.5% | 6.2% | 28.1% | 0.0% | 0.0x | $736M | VS | |
$TRTNpA Triton International Ltd | 71 | 70 | 89 | 70 | - | 1.7x | 0.0% | - | 97.4% | 58.0% | 37.4% | - | 8.8% | 264.0x | $2.5B | VS | |
$EDU New Oriental Education & Technology Group Inc. | 71 | 83 | 52 | 77 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$NTES NetEase, Inc. | 71 | 88 | 93 | 68 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$UTI UNIVERSAL TECHNICAL INSTITUTE INC | 70 | 86 | 86 | 72 | 43.2x | 16.0x | 15.3% | 5.8% | 100.0% | 6.9% | 5.2% | 15.1% | 0.0% | 24.0x | $1.8B | VS | |
$DRCT Direct Digital Holdings, Inc. | 48 | 33 | 29 | 97 | - | - | 132.7% | -95.5% | 32.7% | -40.3% | -61.8% | -63.5% | 0.0% | - | $8M | ||
| SECTOR BENCH | - | - | - | - | - | 23.7x | 11.7x | 5.7% | 2.4% | 64.6% | 4.5% | 2.8% | 8.6% | 0.0% | 0.3x | - | REF |
Direct Digital Holdings, Inc. (DRCT) receives a "Reduce" rating with a composite score of 48.2/100. It ranks #2306 out of 7,333 stocks in our coverage universe and carries a 2-star rating. Ratings are driven by a 6-factor quantitative model measuring quality, value, momentum, investment, stability, and short interest.
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Outperforming peers — winners tend to keep winning over 3-12 months
Expensive relative to fundamentals — limited margin of safety
Weak fundamentals — higher risk of value trap
High volatility — wider range of outcomes increases timing risk
Aggressive spending — empire-building risk, dilutive growth
Mid-range overall rating
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Relative valuation derived from Services sector benchmarks. Model weights: EV/EBITDA (40%), P/B (35%), P/S (25%). Re-calculated daily.
No analyst ratings for DRCT.
View All Ratings| Factor | Global | Sector | Tilt |
|---|---|---|---|
| PROFITABILITY | 33 | 21 | +12ALPHA |
| MOMENTUM | 97 | 99 | -2NEUTRAL |
| VALUATION | 29 | 22 | +7ALPHA |
| INVESTMENT | 34 | 51 | -17DRAG |
| STABILITY | 2 | 0 | +2NEUTRAL |
| SHORT INT | 53 | 61 | -8DRAG |
Global = full universe. Sector = relative to industry peers. Positive tilt indicates idiosyncratic strength.
ROIC -31.1% vs WACC 8.5% (spread -39.5%)
GM 33% vs sector 65%, OM -40% vs sector 5%
Capital turnover 0.80x
Rev growth -63%, 4yr history
Interest coverage -3.5x
Composite assessment of profitability, capital efficiency, and financial strength. Top-tier entities demonstrate sustainable cash flow generation and elite competitive moats.
Profit generated per dollar of shareholder equity
Efficiency of asset utilization
Pricing power and cost efficiency
Core business profitability
Bottom-line profitability
The Quality factor evaluates the persistence and magnitude of realized cash flows. Companies with scores >70 exhibit superior pricing power and structural financial resilience through diverse economic regimes.
Our uncertainty rating tracks the predictability of future cash flows and potential for permanent capital loss. Moderate visibility with standard industry cyclicality.
We rate Direct Digital Holdings, Inc. (DRCT) as a Reduce with a composite score of 48.2/100 at a current price of $1.07. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential.
Direct Digital Holdings, Inc. holds a top-quartile position (#0 of 50) within the Services sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 48.2/100 places it at rank #2306 in our full universe.
The near-term outlook is constructive, with revenue growing at -63% and momentum in the 97th percentile confirming positive market sentiment. The combination of strong top-line growth and favorable price dynamics suggests the company is executing well on its growth strategy.
No Moat
Very High
Poor
Fair Value
Returns on equity of 132.7% exceed cost of capital.
Positive momentum indicates institutional accumulation.
Stable competitive position in a defensive sector.
Below-average quality raises earnings sustainability concerns.
Vulnerability to macroeconomic shocks and interest rate volatility.
Direct Digital Holdings, Inc. represents a reduce based on multi-factor quantitative performance.
Direct Digital Holdings, Inc. receives a Reduce rating from our analysis, with a composite score of 48.2/100 and 2 out of 5 stars, ranking #2306 out of 7,333 stocks. DRCT's factor profile shows weakness across multiple dimensions, suggesting the stock may underperform going forward. Existing holders may want to consider trimming positions or tightening stop-losses.
DRCT's quality score of 33/100 is below average, suggesting challenges with profitability or capital efficiency. The company reports a return on equity of 132.7% (sector avg: 5.7%), gross margins of 32.7% (sector avg: 64.6%), net margins of -61.8% (sector avg: 2.8%). Investors should examine whether management is actively addressing these weaknesses or if they reflect structural industry headwinds.
DRCT registers a value score of just 29/100, suggesting the stock trades at a significant premium to its fundamental metrics. High-premium valuations like this require strong future execution to avoid multiple compression, and downside risk is elevated if growth disappoints.
Direct Digital Holdings, Inc.'s investment score of 34/100 suggests limited reinvestment activity. Key growth metrics include revenue growth of -63.5% vs. a sector average of 8.6% and a return on assets of -95.5% (sector: 2.4%). While this can be positive for mature, cash-generative businesses returning capital to shareholders, it may also signal a lack of growth opportunities or management conservatism.
Direct Digital Holdings, Inc. (DRCT) is exhibiting exceptional momentum with a score of 97/100, placing it among the strongest trending stocks in the market. Revenue growth stands at -63.5% year-over-year, while a beta of 2.41 reflects its sensitivity to broader market moves. Stocks with momentum scores this high have historically outperformed over the following 3–12 months, suggesting DRCT may continue to benefit from strong institutional interest and positive price trends.
Direct Digital Holdings, Inc. registers a low stability score of 2/100, indicating high volatility and potentially stressed financial conditions. Key stability metrics include a beta of 2.41. Stocks at this level carry elevated capital loss risk and may be unsuitable for conservative portfolios without careful risk management.
The short interest score of 53/100 for DRCT suggests somewhat elevated bearish positioning by institutional traders. Specific risk factors include high market sensitivity (beta: 2.41), micro-cap liquidity risk. With a $8M market cap (micro-cap), Direct Digital Holdings, Inc. may experience above-average volatility. Investors should consider whether the short thesis has merit or if it creates a potential short-squeeze opportunity.
Direct Digital Holdings, Inc. is a micro-cap company in the Services sector, ranked #0 of 50 in its sector (100th percentile) and #2306 of 7,333 overall (69th percentile). Key comparisons include ROE of 132.7% exceeding the 5.7% sector median and operating margins of -40.3% below the 4.5% sector average. This top-quartile standing reflects exceptional competitive strength relative to Services peers.
While DRCT currently exhibits a REDUCE profile, superior opportunities exist within the SERVICES sector. Our model identifies several "Strong Buy" candidates with higher quality scores and more attractive valuations among direct industry competitors.
View Top Services Alpha →Quant Factor Profile
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Improvement in Stability (2) would have the largest impact on the composite score.
ROE 2212% ABOVE SECTOR MEDIAN (FAVORABLE)
Gross Margin 49% BELOW SECTOR MEDIAN
Op. Margin 996% BELOW SECTOR MEDIAN
Above 50MA
37.18%
Net New Highs
+51081
Direct Digital Holdings, Inc. (Nasdaq: DRCT) ("Direct Digital Holdings" or the "Company"), a leading advertising and marketing technology platform operating through its companies Colossus Media, LLC ("Colossus SSP") and Orange 142, LLC ("Orange 142"), today announced that the Company has received formal notice from The Nasdaq Stock Market LLC ("Nasdaq") confirming that the Company has regained compliance with Nasdaq Listing Rule 5550(a)(2), which requires a minimum bid price of $1.00 per share,
Orange 142, LLC ("Orange 142"), a division of Direct Digital Holdings (Nasdaq: DRCT) and a leading digital marketing agency for mid-market brands and agencies, in partnership with the 4As and the Pigeon Forge Department of Tourism, today announced an upcoming webinar on how a leading travel destination adapted its digital strategy to remain visible as consumer discovery shifts toward AI-driven search.
Orange 142, LLC ("Orange 142"), a leading digital marketing agency and a division of Direct Digital Holdings (Nasdaq: DRCT), today announced that Cassandra Razzi, Senior Manager of Business Development, has been named to the 2026 Social Impact Committee of Destinations International (DI), the world's largest association for destination organizations and tourism professionals. The appointment reflects Orange 142's ongoing work with destination marketing organizations (DMOs) to expand reach, drive
Orange 142, LLC ("Orange 142"), a division of Direct Digital Holdings (Nasdaq: DRCT), and a leading digital marketing agency for mid-market brands and agencies, today announced Orange 142 has been recognized with two 2025 MarCom Awards for its work with Emerald Isle Realty, earning Gold for SEM Campaign ("One Line to Rule Them All") and Platinum for Organic Social Media Strategy ("Organic Impact"). The awards recognize a data-driven, full-funnel approach that delivered measurable growth across p
U.S. stock futures experienced a trading halt due to a data center glitch on Black Friday. Major ETFs like SPY and QQQ remained positive, while select stocks showed varied performance amid holiday trading and promotional activities.