Virtus Investment Partners (VRTS): Evaluating Valuation After Latest Assets Under Management Update

Virtus Investment Partners (VRTS) just released its latest update on assets under management, providing investors with an early look at the firm’s business trends ahead of the upcoming financial results.

See our latest analysis for Virtus Investment Partners.

The early look at Virtus’s assets under management comes at a time when its stock has faced pressure, with the share price sliding 12.5% so far this year and total shareholder return down 9.8% over the last twelve months. While the short-term momentum has faded a bit, long-term investors will note the stock has still delivered over 40% total return in the past three years. This may point to underlying growth potential even as the market weighs near-term challenges and shifting client flows.

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With shares lately under pressure while the company has demonstrated a solid track record over the past three years, the key question is whether Virtus is currently undervalued or if the market has already priced in any future upside.

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

Virtus Investment Partners is currently trading at a price-to-earnings (P/E) ratio of 8.9x, a figure notably below both its peer group and the broader industry average. With a last close at $191.81 per share, this suggests the market is assigning a significant valuation discount to the company's recent earnings performance.

The price-to-earnings ratio measures how much investors are paying for each dollar of company earnings. It is a critical gauge for asset managers like Virtus, where earnings stability and growth prospects underpin share price potential. The low P/E could signal the market's skepticism regarding future profitability or reflect headwinds unique to the sector.

Notably, Virtus's P/E sits well below the peer average of 28.8x and the US Capital Markets industry average of 25.8x. This substantial discount highlights that, compared to its competitors, Virtus may be underappreciated by investors on current earnings. If the company's business stabilizes or improves, the P/E could move closer to industry levels.

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

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

However, slowing annual revenue growth and recent share price declines could pose challenges for Virtus if these trends continue or worsen in the coming quarters.

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

Another View: Discounted Cash Flow Perspective

Looking at Virtus Investment Partners from the perspective of our SWS DCF model provides a different angle on valuation. This method estimates the company’s true worth based on future cash flows. In this case, it suggests that Virtus shares are trading below fair value. Does this mean the potential upside is greater than the market thinks, or could risks keep the stock subdued?

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 see these trends differently or prefer to dive into the numbers on your own, you can easily craft your own analysis in just a few minutes with 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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