VELOCITY FINANCIAL INC (VEL) Stock Fundamental Analysis
NYSE:VEL - New York Stock Exchange, Inc. - US92262D1019 - Common Stock - Currency: USD
We assign a fundamental rating of 5 out of 10 to VEL. VEL was compared to 99 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 not overvalued while it is showing excellent growth. This is an interesting combination.
1. Profitability
1.1 Basic Checks
In the past year VEL was profitable.
VEL had a positive operating cash flow in the past year.
Of the past 5 years VEL 4 years were profitable.
Each year in the past 5 years VEL had a positive operating cash flow.
1.2 Ratios
The Return On Assets of VEL (1.16%) is comparable to the rest of the industry.
The Return On Equity of VEL (12.29%) is better than 62.63% of its industry peers.
VEL's Return On Invested Capital of 4.87% is fine compared to the rest of the industry. VEL outperforms 63.64% 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 11.83%.
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's Profit Margin of 15.51% is fine compared to the rest of the industry. VEL outperforms 67.68% of its industry peers.
In the last couple of years the Profit Margin of VEL has grown nicely.
The Operating Margin of VEL (87.79%) is better than 100.00% of its industry peers.
VEL's Operating Margin has improved in the last couple of years.
The Gross Margin of VEL (89.66%) is better than 92.93% of its industry peers.
In the last couple of years the Gross Margin of VEL has remained more or less at the same level.
| 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.
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.
The debt/assets ratio for VEL is higher compared to a year ago.
2.2 Solvency
VEL has an Altman-Z score of 0.28. This is a bad value and indicates that VEL is not financially healthy and even has some risk of bankruptcy.
With a Altman-Z score value of 0.28, VEL perfoms like the industry average, outperforming 45.45% of the companies in the same industry.
The Debt to FCF ratio of VEL is 205.08, which is on the high side as it means it would take VEL, 205.08 years of fcf income to pay off all of its debts.
VEL has a Debt to FCF ratio of 205.08. This is comparable to the rest of the industry: VEL outperforms 40.40% of its industry peers.
A Debt/Equity ratio of 9.32 is on the high side and indicates that VEL has dependencies on debt financing.
With a Debt to Equity ratio value of 9.32, VEL is not doing good in the industry: 84.85% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 9.32 | ||
| Debt/FCF | 205.08 | ||
| Altman-Z | 0.28 |
ROIC/WACC0.86
WACC5.67%
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.
VEL has a Current ratio of 0.12. This is in the lower half of the industry: VEL underperforms 76.77% of its industry peers.
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.
With a Quick ratio value of 0.12, VEL is not doing good in the industry: 76.77% 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.
Looking at the last year, VEL shows a very strong growth in Revenue. 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.
The Revenue is expected to grow by 16.85% on average over the next years. This is quite good.
EPS Next Y11.2%
EPS Next 2Y11.53%
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.
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 8.26, 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 77.78% of the companies are valued more expensively.
Compared to an average S&P500 Price/Earnings ratio of 26.52, VEL is valued rather cheaply.
With a Price/Forward Earnings ratio of 6.77, the valuation of VEL can be described as very cheap.
74.75% of the companies in the same industry are more expensive than VEL, based on the Price/Forward Earnings ratio.
The average S&P500 Price/Forward Earnings ratio is at 22.25. VEL is valued rather cheaply when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 8.26 | ||
| Fwd PE | 6.77 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of VEL is on the same level as its industry peers.
VEL's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 24.37 | ||
| EV/EBITDA | 13.39 |
4.3 Compensation for Growth
VEL's 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)0.74
PEG (5Y)0.53
EPS Next 2Y11.53%
EPS Next 3Y9.65%
5. Dividend
5.1 Amount
No dividends for VEL!.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
17.1
+0.35 (+2.09%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupFinancial Services
GICS IndustryFinancial Services
Earnings (Last)
Earnings (Next)
Inst Owners61.71%
Inst Owner Change6.94%
Ins Owners3.09%
Ins Owner Change13.6%
Market Cap623.98M
Analysts77.14
Price Target21.76 (27.25%)
Short Float %1.02%
Short Ratio1.65
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)-3.03%
PT rev (3m)-1.92%
EPS NQ rev (1m)1.31%
EPS NQ rev (3m)-3.15%
EPS NY rev (1m)-1.65%
EPS NY rev (3m)1.94%
Revenue NQ rev (1m)-36.87%
Revenue NQ rev (3m)-27.88%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-14.13%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 8.26 | ||
| Fwd PE | 6.77 | ||
| P/S | 1.4 | ||
| P/FCF | 24.37 | ||
| P/OCF | 20.32 | ||
| P/B | 1.11 | ||
| P/tB | 1.12 | ||
| EV/EBITDA | 13.39 |
EPS(TTM)2.07
EY12.11%
EPS(NY)2.53
Fwd EY14.77%
FCF(TTM)0.7
FCFY4.1%
OCF(TTM)0.84
OCFY4.92%
SpS12.23
BVpS15.43
TBVpS15.25
PEG (NY)0.74
PEG (5Y)0.53
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 | 0.28 |
F-Score4
WACC5.67%
ROIC/WACC0.86
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 Y11.2%
EPS Next 2Y11.53%
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