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VELOCITY FINANCIAL INC (VEL) Stock Fundamental Analysis

NYSE:VEL - New York Stock Exchange, Inc. - US92262D1019 - Common Stock - Currency: USD

18.43  0 (0%)

Fundamental Rating

5

Taking everything into account, VEL scores 5 out of 10 in our fundamental rating. VEL was compared to 101 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


Dividend Valuation Growth Profitability Health

7

1. Profitability

1.1 Basic Checks

VEL had positive earnings in the past year.
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 4 of the past 5 years.
VEL Yearly Net Income VS EBIT VS OCF VS FCFVEL Yearly Net Income VS EBIT VS OCF VS FCFYearly Net Income VS EBIT VS OCF VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 100M -100M 200M

1.2 Ratios

VEL's Return On Assets of 1.24% is in line compared to the rest of the industry. VEL outperforms 42.57% of its industry peers.
With a Return On Equity value of 13.28%, VEL perfoms like the industry average, outperforming 57.43% of the companies in the same industry.
VEL's Return On Invested Capital of 4.92% is fine compared to the rest of the industry. VEL outperforms 72.28% of its industry peers.
VEL had an Average Return On Invested Capital over the past 3 years of 4.33%. This is below the industry average of 7.75%.
The 3 year average ROIC (4.33%) for VEL is below the current ROIC(4.92%), indicating increased profibility in the last year.
Industry RankSector Rank
ROA 1.24%
ROE 13.28%
ROIC 4.92%
ROA(3y)0.92%
ROA(5y)0.41%
ROE(3y)8.78%
ROE(5y)5.52%
ROIC(3y)4.33%
ROIC(5y)4.4%
VEL Yearly ROA, ROE, ROICVEL Yearly ROA, ROE, ROICYearly ROA, ROE, ROIC 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 5 -5 10 -10

1.3 Margins

VEL's Profit Margin of 16.58% is fine compared to the rest of the industry. VEL outperforms 67.33% of its industry peers.
In the last couple of years the Profit Margin of VEL has grown nicely.
VEL has a Operating Margin of 87.49%. This is amongst the best in the industry. VEL outperforms 99.01% of its industry peers.
VEL's Operating Margin has improved in the last couple of years.
VEL has a better Gross Margin (90.91%) than 95.05% of its industry peers.
VEL's Gross Margin has been stable in the last couple of years.
Industry RankSector Rank
OM 87.49%
PM (TTM) 16.58%
GM 90.91%
OM growth 3Y4.68%
OM growth 5Y2.39%
PM growth 3YN/A
PM growth 5Y21.75%
GM growth 3Y-1.82%
GM growth 5Y-1.03%
VEL Yearly Profit, Operating, Gross MarginsVEL Yearly Profit, Operating, Gross MarginsYearly Profit, Operating, Gross Margins 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 20 40 60 80

1

2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so VEL is destroying value.
VEL has more shares outstanding than it did 1 year ago.
VEL has more shares outstanding than it did 5 years ago.
VEL has a better debt/assets ratio than last year.
VEL Yearly Shares OutstandingVEL Yearly Shares OutstandingYearly Shares Outstanding 2015 2016 2017 2018 2019 2020 2021 2022 2023 10M 20M 30M
VEL Yearly Total Debt VS Total AssetsVEL Yearly Total Debt VS Total AssetsYearly Total Debt VS Total Assets 2015 2016 2017 2018 2019 2020 2021 2022 2023 1B 2B 3B 4B

2.2 Solvency

Based on the Altman-Z score of 0.30, we must say that VEL is in the distress zone and has some risk of bankruptcy.
VEL has a Altman-Z score of 0.30. This is comparable to the rest of the industry: VEL outperforms 47.52% of its industry peers.
VEL has a debt to FCF ratio of 178.78. This is a negative value and a sign of low solvency as VEL would need 178.78 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 178.78, VEL is doing worse than 60.40% of the companies in the same industry.
A Debt/Equity ratio of 9.44 is on the high side and indicates that VEL has dependencies on debt financing.
VEL has a worse Debt to Equity ratio (9.44) than 88.12% of its industry peers.
Industry RankSector Rank
Debt/Equity 9.44
Debt/FCF 178.78
Altman-Z 0.3
ROIC/WACC0.89
WACC5.53%
VEL Yearly LT Debt VS Equity VS FCFVEL Yearly LT Debt VS Equity VS FCFYearly LT Debt VS Equity VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 1B 2B 3B

2.3 Liquidity

A Current Ratio of 0.13 indicates that VEL may have some problems paying its short term obligations.
With a Current ratio value of 0.13, VEL is not doing good in the industry: 72.28% of the companies in the same industry are doing better.
A Quick Ratio of 0.13 indicates that VEL may have some problems paying its short term obligations.
Looking at the Quick ratio, with a value of 0.13, VEL is doing worse than 72.28% of the companies in the same industry.
Industry RankSector Rank
Current Ratio 0.13
Quick Ratio 0.13
VEL Yearly Current Assets VS Current LiabilitesVEL Yearly Current Assets VS Current LiabilitesYearly Current Assets VS Current Liabilites 2015 2016 2017 2018 2019 2020 2021 2022 2023 100M 200M 300M 400M

7

3. Growth

3.1 Past

The Earnings Per Share has grown by an impressive 40.00% over the past year.
The Earnings Per Share has been growing by 30.08% on average over the past years. This is a very strong growth
The Revenue has grown by 30.61% 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 20.44% on average per year.
EPS 1Y (TTM)40%
EPS 3Y25.45%
EPS 5Y30.08%
EPS Q2Q%27.03%
Revenue 1Y (TTM)30.61%
Revenue growth 3Y22.18%
Revenue growth 5Y20.44%
Sales Q2Q%25.32%

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 13.00% on average per year.
Based on estimates for the next years, VEL will show a small growth in Revenue. The Revenue will grow by 7.96% on average per year.
EPS Next Y25.59%
EPS Next 2Y19.91%
EPS Next 3Y13%
EPS Next 5YN/A
Revenue Next Year5.1%
Revenue Next 2Y7.96%
Revenue Next 3YN/A
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 decreasing.
VEL Yearly Revenue VS EstimatesVEL Yearly Revenue VS EstimatesYearly Revenue VS Estimates 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 100M 200M 300M
VEL Yearly EPS VS EstimatesVEL Yearly EPS VS EstimatesYearly EPS VS Estimates 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 0.5 1 1.5 2

7

4. Valuation

4.1 Price/Earnings Ratio

Based on the Price/Earnings ratio of 9.75, the valuation of VEL can be described as reasonable.
Based on the Price/Earnings ratio, VEL is valued a bit cheaper than the industry average as 69.31% of the companies are valued more expensively.
VEL is valuated cheaply when we compare the Price/Earnings ratio to 30.30, which is the current average of the S&P500 Index.
The Price/Forward Earnings ratio is 8.32, which indicates a very decent valuation of VEL.
VEL's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. VEL is cheaper than 73.27% of the companies in the same industry.
VEL's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 23.06.
Industry RankSector Rank
PE 9.75
Fwd PE 8.32
VEL Price Earnings VS Forward Price EarningsVEL Price Earnings VS Forward Price Earnings ChartPrice Earnings - Forward Price Earnings PE FPE 10 20 30

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, VEL is valued a bit cheaper than the industry average as 64.36% of the companies are valued more expensively.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of VEL indicates a somewhat cheap valuation: VEL is cheaper than 63.37% of the companies listed in the same industry.
Industry RankSector Rank
P/FCF 23.86
EV/EBITDA 13.82
VEL Per share dataVEL EPS, Sales, OCF, FCF, BookValue per sharePer Share Data Per Share 5 10

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.
A more expensive valuation may be justified as VEL's earnings are expected to grow with 13.00% in the coming years.
PEG (NY)0.38
PEG (5Y)0.32
EPS Next 2Y19.91%
EPS Next 3Y13%

0

5. Dividend

5.1 Amount

VEL does not give a dividend.
Industry RankSector Rank
Dividend Yield N/A

VELOCITY FINANCIAL INC

NYSE:VEL (2/20/2025, 8:04:00 PM)

18.43

0 (0%)

Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupFinancial Services
GICS IndustryFinancial Services
Earnings (Last)11-07 2024-11-07/amc
Earnings (Next)03-06 2025-03-06/amc
Inst Owners61.02%
Inst Owner Change0.08%
Ins Owners2.64%
Ins Owner Change1.93%
Market Cap610.22M
Analysts77.5
Price Target22.19 (20.4%)
Short Float %1.54%
Short Ratio5.55
Dividend
Industry RankSector 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)1
Avg EPS beat(2)3.14%
Min EPS beat(2)-3.05%
Max EPS beat(2)9.34%
EPS beat(4)3
Avg EPS beat(4)14.19%
Min EPS beat(4)-3.05%
Max EPS beat(4)29.47%
EPS beat(8)6
Avg EPS beat(8)9.97%
EPS beat(12)9
Avg EPS beat(12)11.74%
EPS beat(16)12
Avg EPS beat(16)20.43%
Revenue beat(2)2
Avg Revenue beat(2)5.3%
Min Revenue beat(2)2.6%
Max Revenue beat(2)8%
Revenue beat(4)4
Avg Revenue beat(4)9.13%
Min Revenue beat(4)2.6%
Max Revenue beat(4)18.4%
Revenue beat(8)8
Avg Revenue beat(8)27.25%
Revenue beat(12)12
Avg Revenue beat(12)59.31%
Revenue beat(16)16
Avg Revenue beat(16)77.6%
PT rev (1m)0%
PT rev (3m)4.82%
EPS NQ rev (1m)-0.52%
EPS NQ rev (3m)12.87%
EPS NY rev (1m)0%
EPS NY rev (3m)-0.78%
Revenue NQ rev (1m)0.36%
Revenue NQ rev (3m)6.17%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.6%
Valuation
Industry RankSector Rank
PE 9.75
Fwd PE 8.32
P/S 1.57
P/FCF 23.86
P/OCF 19.92
P/B 1.26
P/tB 1.28
EV/EBITDA 13.82
EPS(TTM)1.89
EY10.26%
EPS(NY)2.21
Fwd EY12.02%
FCF(TTM)0.77
FCFY4.19%
OCF(TTM)0.93
OCFY5.02%
SpS11.73
BVpS14.64
TBVpS14.43
PEG (NY)0.38
PEG (5Y)0.32
Profitability
Industry RankSector Rank
ROA 1.24%
ROE 13.28%
ROCE 7.34%
ROIC 4.92%
ROICexc 4.96%
ROICexgc 5.05%
OM 87.49%
PM (TTM) 16.58%
GM 90.91%
FCFM 6.59%
ROA(3y)0.92%
ROA(5y)0.41%
ROE(3y)8.78%
ROE(5y)5.52%
ROIC(3y)4.33%
ROIC(5y)4.4%
ROICexc(3y)4.38%
ROICexc(5y)4.45%
ROICexgc(3y)4.43%
ROICexgc(5y)4.49%
ROCE(3y)6.08%
ROCE(5y)6.11%
ROICexcg growth 3Y0.18%
ROICexcg growth 5Y2.82%
ROICexc growth 3Y-0.02%
ROICexc growth 5Y2.62%
OM growth 3Y4.68%
OM growth 5Y2.39%
PM growth 3YN/A
PM growth 5Y21.75%
GM growth 3Y-1.82%
GM growth 5Y-1.03%
F-Score5
Asset Turnover0.07
Health
Industry RankSector Rank
Debt/Equity 9.44
Debt/FCF 178.78
Debt/EBITDA 13.43
Cap/Depr 608.17%
Cap/Sales 1.3%
Interest Coverage 1.48
Cash Conversion 9%
Profit Quality 39.73%
Current Ratio 0.13
Quick Ratio 0.13
Altman-Z 0.3
F-Score5
WACC5.53%
ROIC/WACC0.89
Cap/Depr(3y)125.3%
Cap/Depr(5y)129.29%
Cap/Sales(3y)0.42%
Cap/Sales(5y)0.68%
Profit Quality(3y)172.65%
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)40%
EPS 3Y25.45%
EPS 5Y30.08%
EPS Q2Q%27.03%
EPS Next Y25.59%
EPS Next 2Y19.91%
EPS Next 3Y13%
EPS Next 5YN/A
Revenue 1Y (TTM)30.61%
Revenue growth 3Y22.18%
Revenue growth 5Y20.44%
Sales Q2Q%25.32%
Revenue Next Year5.1%
Revenue Next 2Y7.96%
Revenue Next 3YN/A
Revenue Next 5YN/A
EBIT growth 1Y30.66%
EBIT growth 3Y27.9%
EBIT growth 5Y23.31%
EBIT Next Year32.89%
EBIT Next 3YN/A
EBIT Next 5YN/A
FCF growth 1Y6.39%
FCF growth 3Y-3.01%
FCF growth 5YN/A
OCF growth 1Y14.7%
OCF growth 3Y-3.82%
OCF growth 5YN/A