NYSE:VEL

Stock Analysis Report

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Executive Summary

Velocity Financial, Inc. operates as a real estate finance company in the United States. More Details

Rewards

Trading at 99% below our estimate of its fair value

Earnings are forecast to grow 178.04% per year

Risk Analysis

No risks detected for VEL from our risk checks.


Snowflake Analysis

High growth potential and fair value.


Similar Companies

Share Price & News

How has Velocity Financial's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: VEL is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 7% a week.

Volatility Over Time: VEL's weekly volatility has decreased from 21% to 7% over the past year.


Market Performance


7 Day Return

-0.1%

VEL

-0.06%

US Mortgage

-1.0%

US Market


1 Year Return

-47.9%

VEL

5.9%

US Mortgage

19.6%

US Market

Return vs Industry: VEL underperformed the US Mortgage industry which returned 5.9% over the past year.

Return vs Market: VEL underperformed the US Market which returned 19.6% over the past year.


Shareholder returns

VELIndustryMarket
7 Day-0.1%-0.06%-1.0%
30 Day12.6%1.3%2.3%
90 Day45.5%6.8%13.1%
1 Year-47.9%-47.9%9.1%5.9%22.3%19.6%
3 Yearn/a19.2%9.8%45.3%35.7%
5 Yearn/a90.6%63.5%124.8%99.8%

Long-Term Price Volatility Vs. Market

How volatile is Velocity Financial's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Velocity Financial undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: VEL ($7.04) is trading below our estimate of fair value ($691.31)

Significantly Below Fair Value: VEL is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: VEL is unprofitable, so we can't compare its PE Ratio to the US Mortgage industry average.

PE vs Market: VEL is unprofitable, so we can't compare its PE Ratio to the US market.


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate VEL's PEG Ratio to determine if it is good value.


Price to Book Ratio

PB vs Industry: VEL is good value based on its PB Ratio (0.7x) compared to the US Mortgage industry average (0.9x).


Next Steps

Future Growth

How is Velocity Financial forecast to perform in the next 1 to 3 years based on estimates from 3 analysts?

178.0%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: VEL is forecast to become profitable over the next 3 years, which is considered faster growth than the savings rate (2%).

Earnings vs Market: VEL is forecast to become profitable over the next 3 years, which is considered above average market growth.

High Growth Earnings: VEL's is expected to become profitable in the next 3 years.

Revenue vs Market: VEL's revenue (21.1% per year) is forecast to grow faster than the US market (10.3% per year).

High Growth Revenue: VEL's revenue (21.1% per year) is forecast to grow faster than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if VEL's Return on Equity is forecast to be high in 3 years time


Next Steps

Past Performance

How has Velocity Financial performed over the past 5 years?

-52.6%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: VEL is currently unprofitable.

Growing Profit Margin: VEL is currently unprofitable.


Past Earnings Growth Analysis

Earnings Trend: VEL is unprofitable, and losses have increased over the past 5 years at a rate of 52.6% per year.

Accelerating Growth: Unable to compare VEL's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: VEL is unprofitable, making it difficult to compare its past year earnings growth to the Mortgage industry (2.7%).


Return on Equity

High ROE: VEL has a negative Return on Equity (4.46%), as it is currently unprofitable.


Next Steps

Financial Health

How is Velocity Financial's financial position? (This company is analysed differently as a bank or financial institution)


Financial Position Analysis


Debt to Equity History and Analysis


Balance Sheet


Financial Institutions Analysis

Asset Level: VEL's Assets to Equity ratio (7.1x) is low.

Allowance for Bad Loans: Insufficient data to determine if VEL has a sufficient allowance for bad loans.

Low Risk Liabilities: VEL reports no customer deposits, 100% of its liabilities are made up of higher risk sources of funding.

Loan Level: Insufficient data to determine if VEL has an appropriate level of Loans to Assets ratio.

Low Risk Deposits: VEL reports no customer deposits, loans are made up entirely of externally borrowed funds.

Level of Bad Loans: Insufficient data to determine if VEL has an appropriate level of bad loans.


Next Steps

Dividend

What is Velocity Financial current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

Notable Dividend: Unable to evaluate VEL's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate VEL's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if VEL's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if VEL's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of VEL's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

3.7yrs

Average management tenure


CEO

Chris Farrar (53 yo)

no data

Tenure

US$863,852

Compensation

Mr. Christopher D. Farrar, also known as Chris, is the Co-founder, Chief Executive Officer, President and Director of Velocity Financial, Inc. (formerly known as Velocity Financial, LLC) since 2004. He ser...


CEO Compensation Analysis

Compensation vs Market: Chris's total compensation ($USD863.85K) is above average for companies of similar size in the US market ($USD535.60K).

Compensation vs Earnings: Chris's compensation has increased whilst the company is unprofitable.


Leadership Team

NamePositionTenureCompensationOwnership
Christopher Farrar
Co-Founderno dataUS$863.85k0.74%
$ 1.0m
Mark Szczepaniak
CFO & Corporate Secretary3.67yrsUS$418.10k0.032%
$ 45.1k
Jeffrey Taylor
Executive Vice President of Capital Markets17yrsUS$475.95k0.024%
$ 34.0k
Graham Comley
Chief Information Officer of Velocity Commercial Capital LLCno dataUS$375.60k0.020%
$ 28.2k
Joseph Cowell
Chief Operating Officer of Velocity Commercial Capital LLCno dataUS$420.60k0.011%
$ 15.6k
Christopher Oltmann
Chief Accounting Officer & Director of Investor Relationsno datano data0.0087%
$ 12.3k
Roland Kelly
General Counsel & Corporate Secretary0.50yrno data0.00050%
$ 707.1

3.7yrs

Average Tenure

51yo

Average Age

Experienced Management: VEL's management team is considered experienced (3.7 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Christopher Farrar
Co-Founderno dataUS$863.85k0.74%
$ 1.0m
John Pitstick
Independent Director1yrno data0.12%
$ 176.0k
Alan Mantel
Independent Chairman of the Boardno datano datano data
John Pless
Independent Director14yrsno datano data
Daniel Ballen
Independent Director4.08yrsno datano data
Joy Schaefer
Independent Director1yrno data0.037%
$ 52.6k
Dorika Beckett
Independent Director0.50yrno datano data

2.5yrs

Average Tenure

49.5yo

Average Age

Experienced Board: VEL's board of directors are not considered experienced ( 2.5 years average tenure), which suggests a new board.


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Insufficient data to determine if shareholders have been diluted in the past year.


Top Shareholders

Company Information

Velocity Financial, Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Velocity Financial, Inc.
  • Ticker: VEL
  • Exchange: NYSE
  • Founded: 2004
  • Industry: Thrifts and Mortgage Finance
  • Sector: Banks
  • Market Cap: US$141.416m
  • Shares outstanding: 20.09m
  • Website: https://www.velfinance.com

Number of Employees


Location

  • Velocity Financial, Inc.
  • 30699 Russell Ranch Road
  • Suite 295
  • Westlake Village
  • California
  • 91362
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
VELNYSE (New York Stock Exchange)YesCommon StockUSUSDJan 2020

Biography

Velocity Financial, Inc. operates as a real estate finance company in the United States. The company primarily originates and manages investor loans secured by 1-4 unit residential rental and small commerc...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2021/01/18 00:34
End of Day Share Price2021/01/15 00:00
Earnings2020/09/30
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.