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 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
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.
VEL had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
VEL has a Return On Assets of 1.16%. This is comparable to the rest of the industry: VEL outperforms 45.54% of its industry peers.
The Return On Equity of VEL (12.29%) is better than 65.35% of its industry peers.
Looking at the Return On Invested Capital, with a value of 4.87%, VEL is in the better half of the industry, outperforming 65.35% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for VEL is below the industry average of 7.76%.
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 better Profit Margin (15.51%) than 67.33% of its industry peers.
In the last couple of years the Profit Margin of VEL has grown nicely.
With an excellent Operating Margin value of 87.79%, VEL belongs to the best 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.
VEL's Gross Margin of 89.66% is amongst the best of the industry. VEL outperforms 93.07% of its industry peers.
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
With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), 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
Based on the Altman-Z score of 0.28, we must say that VEL is in the distress zone and has some risk of bankruptcy.
VEL has a Altman-Z score (0.28) which is in line with its industry peers.
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.
VEL has a Debt to FCF ratio (205.08) which is in line with its industry peers.
VEL has a Debt/Equity ratio of 9.32. This is a high value indicating a heavy dependency on external financing.
The Debt to Equity ratio of VEL (9.32) is worse than 85.15% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 9.32 | ||
| Debt/FCF | 205.08 | ||
| Altman-Z | 0.28 |
ROIC/WACC0.87
WACC5.58%
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.
With a Current ratio value of 0.12, VEL is not doing good in the industry: 77.23% 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.
Looking at the Quick ratio, with a value of 0.12, VEL is doing worse than 77.23% of the companies in the same industry.
| 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 31.28% over the past year.
The Earnings Per Share has been growing by 15.62% on average over the past years. This is quite good.
The Revenue has grown by 30.65% in the past year. This is a very strong growth!
The Revenue has been growing by 20.82% on average over the past years. This is a very strong growth!
EPS 1Y (TTM)31.28%
EPS 3Y27.91%
EPS 5Y15.62%
EPS Q2Q%62.22%
Revenue 1Y (TTM)30.65%
Revenue growth 3Y29.96%
Revenue growth 5Y20.82%
Sales Q2Q%-13.09%
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.
The Revenue is expected to grow by 16.85% on average over the next years. This is quite good.
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.
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
With a Price/Earnings ratio of 7.48, the valuation of VEL can be described as very cheap.
VEL's Price/Earnings ratio is rather cheap when compared to the industry. VEL is cheaper than 85.15% of the companies in the same industry.
When comparing the Price/Earnings ratio of VEL to the average of the S&P500 Index (26.54), we can say VEL is valued rather cheaply.
With a Price/Forward Earnings ratio of 7.01, the valuation of VEL can be described as very cheap.
Compared to the rest of the industry, the Price/Forward Earnings ratio of VEL indicates a somewhat cheap valuation: VEL is cheaper than 79.21% of the companies listed in the same industry.
When comparing the Price/Forward Earnings ratio of VEL to the average of the S&P500 Index (35.28), we can say VEL is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 7.48 | ||
| Fwd PE | 7.01 |
4.2 Price Multiples
VEL's Enterprise Value to EBITDA ratio is in line with the industry average.
The rest of the industry has a similar Price/Free Cash Flow ratio as VEL.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 25.05 | ||
| EV/EBITDA | 13.26 |
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.
VEL has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)0.7
PEG (5Y)0.48
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 |
17.58
+1.25 (+7.65%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupFinancial Services
GICS IndustryFinancial Services
Earnings (Last)
Earnings (Next)
Inst Owners59.45%
Inst Owner Change4.26%
Ins Owners3.06%
Ins Owner Change11.96%
Market Cap641.49M
Analysts77.14
Price Target21.76 (23.78%)
Short Float %1.87%
Short Ratio2.83
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)0%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-3.47%
EPS NY rev (1m)0%
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)-3.05%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 7.48 | ||
| Fwd PE | 7.01 | ||
| P/S | 1.44 | ||
| P/FCF | 25.05 | ||
| P/OCF | 20.89 | ||
| P/B | 1.14 | ||
| P/tB | 1.15 | ||
| EV/EBITDA | 13.26 |
EPS(TTM)2.35
EY13.37%
EPS(NY)2.51
Fwd EY14.27%
FCF(TTM)0.7
FCFY3.99%
OCF(TTM)0.84
OCFY4.79%
SpS12.23
BVpS15.43
TBVpS15.25
PEG (NY)0.7
PEG (5Y)0.48
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 | 13.32 | ||
| Cap/Depr | 210.56% | ||
| Cap/Sales | 1.14% | ||
| Interest Coverage | 1.45 | ||
| Cash Conversion | 7.79% | ||
| Profit Quality | 37% | ||
| Current Ratio | 0.12 | ||
| Quick Ratio | 0.12 | ||
| Altman-Z | 0.28 |
F-Score4
WACC5.58%
ROIC/WACC0.87
Cap/Depr(3y)194.25%
Cap/Depr(5y)148.18%
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)31.28%
EPS 3Y27.91%
EPS 5Y15.62%
EPS Q2Q%62.22%
EPS Next Y10.62%
EPS Next 2Y11.16%
EPS Next 3Y9.65%
EPS Next 5YN/A
Revenue 1Y (TTM)30.65%
Revenue growth 3Y29.96%
Revenue growth 5Y20.82%
Sales Q2Q%-13.09%
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