Victory Capital Holdings (NASDAQ:VCTR) Emerges as a Prime Affordable Growth Candidate

Victory Capital Holdings - Class A (NASDAQ:VCTR) has been identified by an investment screening method centered on finding "Affordable Growth" possibilities. This process looks for businesses with good growth paths and fair prices, backed by acceptable profitability and financial soundness. The method aims to prevent paying too much for growth by focusing on stocks where the potential for expansion is not completely accounted for in the present share price, offering an opening for investors using Growth at a Reasonable Price (GARP) tactics.

Growth Path

Victory Capital displays notable growth attributes that fit well with affordable growth standards. The company's earnings and revenue increases show both past solidity and encouraging future direction, which is important for growth-focused investment.

• Earnings Per Share (EPS) increased 15.51% over the last year
• Five-year average EPS growth is 12.55%
• Revenue rose 20.90% in the last year
• Future EPS growth is estimated at 16.02% per year
• Anticipated revenue growth of 21.58% in future years

The quickening in earnings and revenue growth rates from past to estimated levels points to better business speed. This mix of steady past results and increasing future possibilities makes Victory Capital especially interesting for investors focused on growth who prefer continuous increase over irregular jumps.

Valuation Review

The company's valuation measurements offer a strong argument for having a fair price compared to its growth possibilities. Several valuation methods confirm the market has not completely valued the company's growth capacity.

• P/E ratio of 13.11 is better than the industry average of 19.03
• Forward P/E of 9.72 points to a better valuation picture
• Enterprise Value/EBITDA ratio is lower than 87% of industry members
• Price/Free Cash Flow ratio is more appealing than 62% of rivals
• PEG ratio shows a low price when growth is included

These valuation figures are especially significant considering the company's high profitability scores. The market seems to be pricing Victory Capital at points that do not fully represent its current operational quality or its future growth path, forming the price difference that affordable growth investors look for.

Profitability Quality

Victory Capital's operational effectiveness gives a stable base for its growth narrative. The company shows outstanding profitability measurements that exceed most industry rivals, indicating lasting competitive benefits.

The company reaches an operating margin of 46.16%, doing better than 80% of industry members, while keeping a gross margin of 83.35% that is with the top in the capital markets field. Return measurements including ROA of 6.28%, ROE of 10.83%, and ROIC of 9.26% all put the company in the better half of its industry. Margin improvement across gross, operating, and profit margins in recent years signals better operational effectiveness that supports future growth continuity.

Financial Soundness Points

The company keeps acceptable financial soundness with some points of quality and others needing attention. While not outstanding, the health measurements give enough steadiness for a growth investment.

Solvency measures show good features with a debt-to-equity ratio of 0.39 showing balanced borrowing, and a debt-to-FCF ratio of 3.67 pointing to workable debt amounts. Liquidity measurements are more middle-ground with current and quick ratios both at 1.14, placing the company near industry averages. The Altman-Z score of 2.46, while not in the most secure group, still does better than 72% of industry members and shows low near-term failure risk. Share count decrease over one and five-year periods shows capital use discipline.

Investment Points

Victory Capital stands as a strong example in affordable growth investment, joining higher-than-average growth rates with acceptable valuation multiples. The company's high profitability gives trust in the quality of earnings, while its valuation allows space for multiple improvement if growth hopes are achieved. The financial soundness picture, while not outstanding, seems enough to support ongoing growth projects without high risk.

For investors looking for more businesses that match this affordable growth description, additional screening outcomes can be found using the Affordable Growth Stock Screener.

Disclaimer: This analysis uses fundamental data and screening processes for information only. It is not investment advice, a suggestion, or a support of any security. Investors must perform their own study and talk to financial consultants before making investment choices. Past results do not ensure future outcomes.