Virtus Investment Partners (VRTS): Assessing Valuation After New $650 Million Credit Agreement Boosts Flexibility

Virtus Investment Partners (VRTS) has just entered into a new credit agreement, securing a $400 million term loan along with a $250 million revolving credit facility. This refinancing move is designed to strengthen the company’s financial flexibility and support its operational plans going forward.

See our latest analysis for Virtus Investment Partners.

Virtus Investment Partners’ latest refinancing comes at a time when momentum has been muted, with the share price at $192.48 and the 1-year total shareholder return down just under 2%. While the new credit agreement could improve the company’s future flexibility, recent share price returns reflect cautious sentiment and suggest investors are seeking clearer signals of growth or stability before committing further.

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With shares trading just below analysts’ targets and recent returns subdued, the key question is whether Virtus is quietly undervalued or if the market has already accounted for any future rebound. Could this be a new buying opportunity, or is everything priced in?

Price-to-Earnings of 8.9x: Is it justified?

Virtus Investment Partners trades at a price-to-earnings ratio (P/E) of 8.9x, signaling a strong value proposition when compared to both its peers and the broader US Capital Markets industry. The current share price of $192.48 sits below that of many competitors, highlighting an apparent disconnect between the market's pricing and Virtus's recent profit performance.

The price-to-earnings multiple measures how much investors are willing to pay for each dollar of earnings and is a key barometer in the capital markets sector. A lower P/E can indicate undervaluation or skepticism about a company’s future prospects, but must always be seen in context of growth and quality.

Virtus’s 8.9x P/E stands out sharply against its peer group average of 28.8x and the industry average of 27.1x. This emphasizes its relative value and may also suggest a potential undervaluation by the market. If the market re-rates the stock towards the sector average, there could be significant upside.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Earnings of 8.9x (UNDERVALUED)

However, declining annual revenue and subdued recent returns may signal headwinds. As a result, near-term sentiment could shift further if growth fails to materialize.

Find out about the key risks to this Virtus Investment Partners narrative.

Another View: Discounted Cash Flow Perspective

Looking at Virtus Investment Partners through the lens of our DCF model, the shares appear to be trading at roughly 8% below our estimate of fair value ($209.42 versus $192.48). This method points to potential undervaluation. However, could the true upside be greater, or is the market factoring in risks the model does not?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Virtus Investment Partners for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Virtus Investment Partners Narrative

If you’d rather take matters into your own hands and dig deeper into the numbers, it’s quick and easy to build your own perspective, too. Do it your way

A great starting point for your Virtus Investment Partners research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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