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Verdict
Quantitative factor alignment verified for current market regime.
Quant Score
Rank
#4028
Positioning
Market Dominance
Services
Computer Software
$6.4B
Yakov Faitelson
Varonis Systems, Inc. provides software products and services that allow enterprises to manage, analyze, alert, and secure enterprise data. Its software enables enterprises to protect data stored on premises and in the cloud, including sensitive files and emails; confidential personal data belonging to customers, and patients and employees' data. The company also provides Data Classification Engine that identifies and tags data based on criteria set in various metadata dimensions.
Headcount
2.1K
HQ Base
New York, New York
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X-AXIS: EV/EBITDA (LOWER = CHEAPER) | Y-AXIS: ROE (HIGHER = ELITE) | RED CIRCLE = VRNS 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 | |
$VRNS VARONIS SYSTEMS INC | 36 | 32 | 36 | 31 | - | - | -20.0% | -6.7% | 80.1% | -23.6% | -20.2% | 24.0% | 0.0% | 199.0x | $6.4B | ||
| SECTOR BENCH | - | - | - | - | - | 23.7x | 11.7x | 5.7% | 2.4% | 64.6% | 4.5% | 2.8% | 8.6% | 0.0% | 0.3x | - | REF |
VARONIS SYSTEMS INC (VRNS) receives a "Avoid" rating with a composite score of 35.8/100. It ranks #4028 out of 7,333 stocks in our coverage universe and carries a 1-star rating. Ratings are driven by a 6-factor quantitative model measuring quality, value, momentum, investment, stability, and short interest.
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Lagging peers — losers tend to keep underperforming
Fair valuation relative to peers
Weak fundamentals — higher risk of value trap
Average volatility — neutral timing signal
Moderate investment profile
Below-average composite — caution warranted
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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 VRNS.
View All Ratings| Factor | Global | Sector | Tilt |
|---|---|---|---|
| PROFITABILITY | 32 | 19 | +13ALPHA |
| MOMENTUM | 31 | 25 | +6ALPHA |
| VALUATION | 36 | 31 | +5NEUTRAL |
| INVESTMENT | 42 | 71 | -29DRAG |
| STABILITY | 46 | 45 | +1NEUTRAL |
| SHORT INT | 52 | 59 | -7DRAG |
Global = full universe. Sector = relative to industry peers. Positive tilt indicates idiosyncratic strength.
ROIC -39.3% vs WACC 8.9% (spread -48.3%)
GM 80% vs sector 65%, OM -24% vs sector 5%
Capital turnover 2.12x, R&D intensity 38.1%
Rev growth 24%, 10yr history
Interest coverage N/A
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 VARONIS SYSTEMS INC (VRNS) as Avoid with a composite score of 35.8/100 at a current price of $21.62. The stock falls in the bottom quintile, and the multi-factor weakness suggests a high probability of continued underperformance.
VARONIS SYSTEMS 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 35.8/100 places it at rank #4028 in our full universe.
No Moat
High
Poor
Fair Value
Gross margins of 80% signal strong pricing power.
Stable competitive position in a defensive sector.
Leverage of 199% D/E amplifies downside risk.
Weak momentum suggests persistent institutional selling pressure.
Below-average quality raises earnings sustainability concerns.
VARONIS SYSTEMS INC represents a avoid based on multi-factor quantitative performance.
Our quantitative model flags VARONIS SYSTEMS INC with an Avoid rating, assigning a composite score of 35.8/100 and 1 out of 5 stars. Ranked #4028 of 7,333 stocks, VRNS falls in the bottom tier across key factors. Historically, stocks with this profile have faced elevated risk of underperformance and capital loss.
VRNS's quality score of 32/100 is below average, suggesting challenges with profitability or capital efficiency. The company reports a return on equity of -20.0% (sector avg: 5.7%), gross margins of 80.1% (sector avg: 64.6%), net margins of -20.2% (sector avg: 2.8%). Investors should examine whether management is actively addressing these weaknesses or if they reflect structural industry headwinds.
With a value score of 36/100, VRNS appears somewhat expensive relative to its fundamentals. Key valuation metrics include a P/B ratio of 4.65x. Investors paying a premium here are likely betting on above-average growth or margin expansion to justify current prices.
With an investment score of 42/100, VRNS exhibits moderate growth-oriented spending. Key growth metrics include revenue growth of 24.0% vs. a sector average of 8.6% and a return on assets of -6.7% (sector: 2.4%). The company appears to be balancing growth investments with capital returns, though the pace of investment may not be enough to accelerate top-line growth meaningfully.
VRNS is currently showing below-average momentum at 31/100, which may indicate weakening institutional interest or negative sentiment shifts. Revenue growth stands at 24.0% year-over-year, while a beta of 0.89 reflects its sensitivity to broader market moves. Investors should note that declining momentum can precede further price weakness, though contrarian opportunities sometimes emerge at these levels.
With a stability score of 46/100, VRNS exhibits average financial resilience. Key stability metrics include a beta of 0.89 and a debt-to-equity ratio of 199.00x (sector avg: 0.3x). While the balance sheet is not a major concern, the stock is subject to typical market volatility and may experience sharper drawdowns during risk-off episodes.
The short interest score of 52/100 for VRNS suggests somewhat elevated bearish positioning by institutional traders. Specific risk factors include elevated leverage (D/E: 199.00x). With a $6.4B market cap (mid-cap), VARONIS SYSTEMS INC may experience above-average volatility. Investors should consider whether the short thesis has merit or if it creates a potential short-squeeze opportunity.
VARONIS SYSTEMS INC is a mid-cap company in the Services sector, ranked #0 of 50 in its sector (100th percentile) and #4028 of 7,333 overall (45th percentile). Key comparisons include ROE of -20.0% trailing the 5.7% sector median and operating margins of -23.6% below the 4.5% sector average. This top-quartile standing reflects exceptional competitive strength relative to Services peers.
While VRNS currently exhibits a AVOID 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 Momentum (31) would have the largest impact on the composite score.
ROE 449% BELOW SECTOR MEDIAN
Gross Margin 24% ABOVE SECTOR MEDIAN (FAVORABLE)
Op. Margin 624% BELOW SECTOR MEDIAN
Above 50MA
37.18%
Net New Highs
+51081
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Varonis Systems provides data security and analytics software to global enterprises, helping organizations manage access and compliance.