VELOCITY FINANCIAL INC (VEL) Stock Fundamental Analysis
NYSE:VEL - New York Stock Exchange, Inc. - US92262D1019 - Common Stock - Currency: USD
VEL gets a fundamental rating of 5 out of 10. The analysis compared the fundamentals against 100 industry peers in the Financial Services industry. While VEL has a great profitability rating, there are quite some concerns on its financial health. VEL is growing strongly while it is still valued neutral. This is a good combination!
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.
Of the past 5 years VEL 4 years were profitable.
VEL had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
VEL has a Return On Assets (1.16%) which is comparable to the rest of the industry.
VEL has a Return On Equity of 12.29%. This is in the better half of the industry: VEL outperforms 63.00% of its industry peers.
VEL has a better Return On Invested Capital (4.87%) than 64.00% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for VEL 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.
In the last couple of years the Profit Margin of VEL has grown nicely.
VEL's Operating Margin of 87.79% is amongst the best of 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 89.66%, VEL belongs to the best 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
VEL has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
Compared to 1 year ago, VEL has more shares outstanding
VEL has more shares outstanding than it did 5 years ago.
Compared to 1 year ago, VEL has a worse debt to assets ratio.
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.
The Altman-Z score of VEL (0.29) is comparable to the rest of the industry.
VEL has a debt to FCF ratio of 205.08. This is a negative value and a sign of low solvency as VEL would need 205.08 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 205.08, VEL is in line with its industry, outperforming 41.00% of the companies in the same industry.
A Debt/Equity ratio of 9.32 is on the high side and indicates that VEL has dependencies on debt financing.
VEL's Debt to Equity ratio of 9.32 is on the low side compared to the rest of the industry. VEL is outperformed by 85.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 9.32 | ||
| Debt/FCF | 205.08 | ||
| Altman-Z | 0.29 |
ROIC/WACC0.85
WACC5.72%
2.3 Liquidity
VEL has a Current 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.
The Current ratio of VEL (0.12) is worse than 77.00% of its industry peers.
A Quick Ratio of 0.12 indicates that VEL may have some problems paying its short term obligations.
With a Quick 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.
| 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.
The Earnings Per Share has been growing by 15.62% on average over the past years. This is quite good.
VEL shows a strong growth in Revenue. In the last year, the Revenue has grown by 31.68%.
The Revenue has been growing by 20.82% on average over the past years. This is a very strong growth!
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
Based on estimates for the next years, VEL will show a quite strong growth in Earnings Per Share. The EPS will grow by 9.65% 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 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
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
VEL is valuated reasonably with a Price/Earnings ratio of 8.58.
Based on the Price/Earnings ratio, VEL is valued a bit cheaper than the industry average as 75.00% of the companies are valued more expensively.
When comparing the Price/Earnings ratio of VEL to the average of the S&P500 Index (27.48), we can say VEL is valued rather cheaply.
VEL is valuated cheaply with a Price/Forward Earnings ratio of 7.08.
Based on the Price/Forward Earnings ratio, VEL is valued a bit cheaper than the industry average as 75.00% of the companies are valued more expensively.
VEL's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 36.52.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 8.58 | ||
| Fwd PE | 7.08 |
4.2 Price Multiples
VEL's Enterprise Value to EBITDA ratio is in line with the industry average.
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 | 25.33 | ||
| EV/EBITDA | 13.46 |
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)0.81
PEG (5Y)0.55
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 |
17.77
-0.08 (-0.45%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupFinancial Services
GICS IndustryFinancial Services
Earnings (Last)
Earnings (Next)
Inst Owners59.45%
Inst Owner Change0%
Ins Owners3.06%
Ins Owner Change13.75%
Market Cap648.43M
Analysts77.14
Price Target21.76 (22.45%)
Short Float %2.22%
Short Ratio2.98
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)0%
PT rev (3m)-1.92%
EPS NQ rev (1m)3.9%
EPS NQ rev (3m)-3.47%
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)-22.7%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 8.58 | ||
| Fwd PE | 7.08 | ||
| P/S | 1.45 | ||
| P/FCF | 25.33 | ||
| P/OCF | 21.11 | ||
| P/B | 1.15 | ||
| P/tB | 1.17 | ||
| EV/EBITDA | 13.46 |
EPS(TTM)2.07
EY11.65%
EPS(NY)2.51
Fwd EY14.11%
FCF(TTM)0.7
FCFY3.95%
OCF(TTM)0.84
OCFY4.74%
SpS12.23
BVpS15.43
TBVpS15.25
PEG (NY)0.81
PEG (5Y)0.55
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
WACC5.72%
ROIC/WACC0.85
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