VELOCITY FINANCIAL INC (VEL) Stock Fundamental Analysis
NYSE:VEL - New York Stock Exchange, Inc. - US92262D1019 - Common Stock - Currency: USD
Overall VEL gets a fundamental rating of 5 out of 10. We evaluated VEL against 100 industry peers in the Financial Services industry. VEL has an excellent profitability rating, but there are concerns on its financial health. VEL is not overvalued while it is showing excellent growth. This is an interesting combination.
1. Profitability
1.1 Basic Checks
In the past year VEL was profitable.
In the past year VEL had a positive cash flow from operations.
Of the past 5 years VEL 4 years were profitable.
In the past 5 years VEL always reported a positive cash flow from operatings.
1.2 Ratios
With a Return On Assets value of 1.16%, VEL perfoms like the industry average, outperforming 45.00% of the companies in the same industry.
With a decent Return On Equity value of 12.29%, VEL is doing good in the industry, outperforming 63.00% of the companies in the same industry.
Looking at the Return On Invested Capital, with a value of 4.87%, VEL is in the better half of the industry, outperforming 64.00% of the companies in the same industry.
VEL had an Average Return On Invested Capital over the past 3 years of 4.55%. This is significantly below the industry average of 11.84%.
The last Return On Invested Capital (4.87%) for VEL is above the 3 year average (4.55%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.16% | ||
| ROE | 12.29% | ||
| ROIC | 4.87% |
ROA(3y)1.08%
ROA(5y)0.5%
ROE(3y)11.12%
ROE(5y)5.87%
ROIC(3y)4.55%
ROIC(5y)4.48%
1.3 Margins
VEL has a Profit Margin of 15.51%. This is in the better half of the industry: VEL outperforms 67.00% of its industry peers.
VEL's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 87.79%, VEL belongs to the top of the industry, outperforming 100.00% of the companies in the same industry.
In the last couple of years the Operating Margin of VEL has grown nicely.
Looking at the Gross Margin, with a value of 89.66%, VEL belongs to the top of the industry, outperforming 93.00% of the companies in the same industry.
VEL's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 87.79% | ||
| PM (TTM) | 15.51% | ||
| GM | 89.66% |
OM growth 3Y2.96%
OM growth 5Y2.4%
PM growth 3Y14.34%
PM growth 5Y8.7%
GM growth 3Y-2.01%
GM growth 5Y-1.17%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so VEL is destroying value.
The number of shares outstanding for VEL has been increased compared to 1 year ago.
Compared to 5 years ago, VEL has more shares outstanding
The debt/assets ratio for VEL is higher compared to a year ago.
2.2 Solvency
VEL has an Altman-Z score of 0.29. This is a bad value and indicates that VEL is not financially healthy and even has some risk of bankruptcy.
VEL has a Altman-Z score (0.29) which is in line with its industry peers.
The Debt to FCF ratio of VEL is 205.08, which is on the high side as it means it would take VEL, 205.08 years of fcf income to pay off all of its debts.
VEL's Debt to FCF ratio of 205.08 is in line compared to the rest of the industry. VEL outperforms 41.00% of its industry peers.
A Debt/Equity ratio of 9.32 is on the high side and indicates that VEL has dependencies on debt financing.
VEL has a worse Debt to Equity ratio (9.32) than 85.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 9.32 | ||
| Debt/FCF | 205.08 | ||
| Altman-Z | 0.29 |
ROIC/WACC0.92
WACC5.27%
2.3 Liquidity
A Current Ratio of 0.12 indicates that VEL may have some problems paying its short term obligations.
With a Current ratio value of 0.12, VEL is not doing good in the industry: 77.00% of the companies in the same industry are doing better.
VEL has a Quick Ratio of 0.12. This is a bad value and indicates that VEL is not financially healthy enough and could expect problems in meeting its short term obligations.
VEL's Quick ratio of 0.12 is on the low side compared to the rest of the industry. VEL is outperformed by 77.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.12 | ||
| Quick Ratio | 0.12 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 20.35% over the past year.
Measured over the past years, VEL shows a quite strong growth in Earnings Per Share. The EPS has been growing by 15.62% on average per year.
The Revenue has grown by 31.68% in the past year. This is a very strong growth!
Measured over the past years, VEL shows a very strong growth in Revenue. The Revenue has been growing by 20.82% on average per year.
EPS 1Y (TTM)20.35%
EPS 3Y27.91%
EPS 5Y15.62%
EPS Q2Q%7.84%
Revenue 1Y (TTM)31.68%
Revenue growth 3Y29.96%
Revenue growth 5Y20.82%
Sales Q2Q%-32.11%
3.2 Future
VEL is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 9.65% yearly.
Based on estimates for the next years, VEL will show a quite strong growth in Revenue. The Revenue will grow by 16.85% on average per year.
EPS Next Y10.62%
EPS Next 2Y11.16%
EPS Next 3Y9.65%
EPS Next 5YN/A
Revenue Next Year-4.78%
Revenue Next 2Y12.46%
Revenue Next 3Y16.85%
Revenue Next 5YN/A
3.3 Evolution
The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 9.05, the valuation of VEL can be described as very reasonable.
Based on the Price/Earnings ratio, VEL is valued a bit cheaper than 77.00% of the companies in the same industry.
VEL is valuated cheaply when we compare the Price/Earnings ratio to 27.21, which is the current average of the S&P500 Index.
Based on the Price/Forward Earnings ratio of 7.47, the valuation of VEL can be described as very cheap.
Based on the Price/Forward Earnings ratio, VEL is valued a bit cheaper than the industry average as 74.00% of the companies are valued more expensively.
VEL is valuated cheaply when we compare the Price/Forward Earnings ratio to 21.70, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.05 | ||
| Fwd PE | 7.47 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of VEL is on the same level as its industry peers.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of VEL is on the same level as its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 26.69 | ||
| EV/EBITDA | 13.52 |
4.3 Compensation for Growth
The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The decent profitability rating of VEL may justify a higher PE ratio.
PEG (NY)0.85
PEG (5Y)0.58
EPS Next 2Y11.16%
EPS Next 3Y9.65%
5. Dividend
5.1 Amount
VEL does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
18.73
+0.19 (+1.02%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupFinancial Services
GICS IndustryFinancial Services
Earnings (Last)
Earnings (Next)
Inst Owners59.45%
Inst Owner Change6.94%
Ins Owners3.06%
Ins Owner Change13.59%
Market Cap683.46M
Analysts77.14
Price Target21.76 (16.18%)
Short Float %2.11%
Short Ratio2.94
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
Yearly DividendN/A
Dividend Growth(5Y)N/A
DPN/A
Div Incr Years0
Div Non Decr Years0
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)13.59%
Min EPS beat(2)4.06%
Max EPS beat(2)23.12%
EPS beat(4)3
Avg EPS beat(4)8.37%
Min EPS beat(4)-3.05%
Max EPS beat(4)23.12%
EPS beat(8)7
Avg EPS beat(8)12.66%
EPS beat(12)9
Avg EPS beat(12)9.1%
EPS beat(16)13
Avg EPS beat(16)14.47%
Revenue beat(2)1
Avg Revenue beat(2)-6.26%
Min Revenue beat(2)-40.39%
Max Revenue beat(2)27.88%
Revenue beat(4)3
Avg Revenue beat(4)-0.48%
Min Revenue beat(4)-40.39%
Max Revenue beat(4)27.88%
Revenue beat(8)7
Avg Revenue beat(8)6.33%
Revenue beat(12)11
Avg Revenue beat(12)37.98%
Revenue beat(16)15
Avg Revenue beat(16)59.03%
PT rev (1m)-3.03%
PT rev (3m)-1.92%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-7.09%
EPS NY rev (1m)-0.52%
EPS NY rev (3m)-2.16%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-36.87%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-14.13%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.05 | ||
| Fwd PE | 7.47 | ||
| P/S | 1.53 | ||
| P/FCF | 26.69 | ||
| P/OCF | 22.26 | ||
| P/B | 1.21 | ||
| P/tB | 1.23 | ||
| EV/EBITDA | 13.52 |
EPS(TTM)2.07
EY11.05%
EPS(NY)2.51
Fwd EY13.39%
FCF(TTM)0.7
FCFY3.75%
OCF(TTM)0.84
OCFY4.49%
SpS12.23
BVpS15.43
TBVpS15.25
PEG (NY)0.85
PEG (5Y)0.58
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.16% | ||
| ROE | 12.29% | ||
| ROCE | 7.46% | ||
| ROIC | 4.87% | ||
| ROICexc | 4.91% | ||
| ROICexgc | 5% | ||
| OM | 87.79% | ||
| PM (TTM) | 15.51% | ||
| GM | 89.66% | ||
| FCFM | 5.74% |
ROA(3y)1.08%
ROA(5y)0.5%
ROE(3y)11.12%
ROE(5y)5.87%
ROIC(3y)4.55%
ROIC(5y)4.48%
ROICexc(3y)4.6%
ROICexc(5y)4.52%
ROICexgc(3y)4.66%
ROICexgc(5y)4.58%
ROCE(3y)6.64%
ROCE(5y)6.4%
ROICexcg growth 3Y6.61%
ROICexcg growth 5Y3.27%
ROICexc growth 3Y6.46%
ROICexc growth 5Y3.05%
OM growth 3Y2.96%
OM growth 5Y2.4%
PM growth 3Y14.34%
PM growth 5Y8.7%
GM growth 3Y-2.01%
GM growth 5Y-1.17%
F-Score4
Asset Turnover0.07
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 9.32 | ||
| Debt/FCF | 205.08 | ||
| Debt/EBITDA | 13.38 | ||
| Cap/Depr | 681.71% | ||
| Cap/Sales | 1.14% | ||
| Interest Coverage | 1.45 | ||
| Cash Conversion | 7.83% | ||
| Profit Quality | 37% | ||
| Current Ratio | 0.12 | ||
| Quick Ratio | 0.12 | ||
| Altman-Z | 0.29 |
F-Score4
WACC5.27%
ROIC/WACC0.92
Cap/Depr(3y)327.67%
Cap/Depr(5y)228.23%
Cap/Sales(3y)0.77%
Cap/Sales(5y)0.68%
Profit Quality(3y)96.08%
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)20.35%
EPS 3Y27.91%
EPS 5Y15.62%
EPS Q2Q%7.84%
EPS Next Y10.62%
EPS Next 2Y11.16%
EPS Next 3Y9.65%
EPS Next 5YN/A
Revenue 1Y (TTM)31.68%
Revenue growth 3Y29.96%
Revenue growth 5Y20.82%
Sales Q2Q%-32.11%
Revenue Next Year-4.78%
Revenue Next 2Y12.46%
Revenue Next 3Y16.85%
Revenue Next 5YN/A
EBIT growth 1Y31.25%
EBIT growth 3Y33.8%
EBIT growth 5Y23.72%
EBIT Next Year20.18%
EBIT Next 3YN/A
EBIT Next 5YN/A
FCF growth 1Y14.61%
FCF growth 3Y-17.04%
FCF growth 5YN/A
OCF growth 1Y23.33%
OCF growth 3Y-13.14%
OCF growth 5YN/A