VELOCITY FINANCIAL INC (VEL) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:VEL - US92262D1019 - Common Stock
20.15 USD
-0.26 (-1.27%)
20.15 USD
0 (0%)
We assign a fundamental rating of 5 out of 10 to VEL. VEL was compared to 97 industry peers in the Financial Services industry. VEL scores excellent on profitability, but there are concerns on its financial health. VEL is growing strongly while it also seems undervalued. 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.
- VEL had positive earnings in 4 of the past 5 years.
- VEL had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
- VEL has a Return On Assets of 1.29%. This is comparable to the rest of the industry: VEL outperforms 52.58% of its industry peers.
- VEL's Return On Equity of 14.15% is fine compared to the rest of the industry. VEL outperforms 73.20% of its industry peers.
- Looking at the Return On Invested Capital, with a value of 4.05%, VEL is in line with its industry, outperforming 57.73% 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 below the industry average of 8.46%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.29% | ||
| ROE | 14.15% | ||
| ROIC | 4.05% |
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
- Looking at the Profit Margin, with a value of 20.70%, VEL belongs to the top of the industry, outperforming 81.44% of the companies in the same industry.
- VEL's Profit Margin has improved in the last couple of years.
- VEL has a Operating Margin of 87.86%. This is amongst the best in the industry. VEL outperforms 100.00% of its industry peers.
- In the last couple of years the Operating Margin of VEL has grown nicely.
- With an excellent Gross Margin value of 86.20%, VEL belongs to the best of the industry, outperforming 89.69% 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 | 87.86% | ||
| PM (TTM) | 20.7% | ||
| GM | 86.2% |
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.
- The number of shares outstanding for VEL has been increased compared to 5 years ago.
- VEL has a worse debt/assets ratio than last year.
2.2 Solvency
- VEL has an Altman-Z score of 0.31. This is a bad value and indicates that VEL is not financially healthy and even has some risk of bankruptcy.
- Looking at the Altman-Z score, with a value of 0.31, VEL is in line with its industry, outperforming 47.42% of the companies in the same industry.
- VEL has a debt to FCF ratio of 110.82. This is a negative value and a sign of low solvency as VEL would need 110.82 years to pay back of all of its debts.
- VEL has a Debt to FCF ratio of 110.82. This is in the lower half of the industry: VEL underperforms 65.98% of its industry peers.
- VEL has a Debt/Equity ratio of 9.70. This is a high value indicating a heavy dependency on external financing.
- The Debt to Equity ratio of VEL (9.70) is worse than 85.57% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 9.7 | ||
| Debt/FCF | 110.82 | ||
| Altman-Z | 0.31 |
ROIC/WACC0.68
WACC5.96%
2.3 Liquidity
- A Current Ratio of 0.29 indicates that VEL may have some problems paying its short term obligations.
- VEL's Current ratio of 0.29 is on the low side compared to the rest of the industry. VEL is outperformed by 65.98% of its industry peers.
- A Quick Ratio of 0.29 indicates that VEL may have some problems paying its short term obligations.
- VEL's Quick ratio of 0.29 is on the low side compared to the rest of the industry. VEL is outperformed by 65.98% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.29 | ||
| Quick Ratio | 0.29 |
3. Growth
3.1 Past
- VEL shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 35.98%, which is quite impressive.
- VEL shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 15.62% yearly.
- VEL shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 11.61%.
- 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)35.98%
EPS 3Y27.91%
EPS 5Y15.62%
EPS Q2Q%46.81%
Revenue 1Y (TTM)11.61%
Revenue growth 3Y29.96%
Revenue growth 5Y20.82%
Sales Q2Q%54.24%
3.2 Future
- Based on estimates for the next years, VEL will show a quite strong growth in Earnings Per Share. The EPS will grow by 11.68% on average per year.
- 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 Y27.37%
EPS Next 2Y13.01%
EPS Next 3Y11.68%
EPS Next 5YN/A
Revenue Next Year5.29%
Revenue Next 2Y15.78%
Revenue Next 3Y16.85%
Revenue Next 5YN/A
3.3 Evolution
- The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past 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
- Based on the Price/Earnings ratio of 7.84, the valuation of VEL can be described as very cheap.
- 78.35% of the companies in the same industry are more expensive than VEL, based on the Price/Earnings ratio.
- VEL's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 28.87.
- With a Price/Forward Earnings ratio of 7.77, 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 72.16% of the companies are valued more expensively.
- The average S&P500 Price/Forward Earnings ratio is at 25.96. VEL is valued rather cheaply when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 7.84 | ||
| Fwd PE | 7.77 |
4.2 Price Multiples
- VEL's Enterprise Value to EBITDA is on the same level as the industry average.
- Based on the Price/Free Cash Flow ratio, VEL is valued a bit cheaper than 65.98% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 14.12 | ||
| EV/EBITDA | 17.13 |
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)0.29
PEG (5Y)0.5
EPS Next 2Y13.01%
EPS Next 3Y11.68%
5. Dividend
5.1 Amount
- VEL does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0% |
VELOCITY FINANCIAL INC / VEL FAQ
What is the ChartMill fundamental rating of VELOCITY FINANCIAL INC (VEL) stock?
ChartMill assigns a fundamental rating of 5 / 10 to VEL.
What is the valuation status for VEL stock?
ChartMill assigns a valuation rating of 7 / 10 to VELOCITY FINANCIAL INC (VEL). This can be considered as Undervalued.
How profitable is VELOCITY FINANCIAL INC (VEL) stock?
VELOCITY FINANCIAL INC (VEL) has a profitability rating of 7 / 10.
What is the earnings growth outlook for VELOCITY FINANCIAL INC?
The Earnings per Share (EPS) of VELOCITY FINANCIAL INC (VEL) is expected to grow by 27.37% in the next year.