Virtus Investment Partners (VRTS): Evaluating Valuation Following Mixed Third Quarter Earnings Results

Virtus Investment Partners (VRTS) just posted third quarter earnings showing declines in both revenue and profit compared to last year, but the story for the full year so far looks a bit more upbeat for investors.

See our latest analysis for Virtus Investment Partners.

Virtus Investment Partners’ third quarter update landed as the share price continued to drift lower, with a 1-month return of -15.67% adding to a year-to-date decline of -25.95%. Over the past year, total shareholder return sits at -28.47%, marking a tougher stretch despite some long-term growth. Today’s price looks more attractive than it has in some time and could shift quickly if investor sentiment rebounds.

If you’re watching shifts in momentum and want to spot other potential opportunities, now is the moment to broaden your search and discover fast growing stocks with high insider ownership

The stock appears undervalued compared to analyst targets and intrinsic value. However, ongoing revenue declines raise concerns and leave investors questioning whether there is a hidden buying opportunity or if the market has already accounted for all the risks.

Price-to-Earnings of 8x: Is it justified?

Virtus Investment Partners currently trades at a price-to-earnings ratio of 8, which is significantly cheaper than both its sector and peer group averages. This suggests the stock may be undervalued at the last close of $162.32.

The price-to-earnings (P/E) ratio measures how much investors are willing to pay for each dollar of company earnings. For a company in the diversified financials sector, this ratio reflects growth prospects, perceived risk, and the sustainability of current and future profits.

With a P/E of 8, Virtus Investment Partners is priced well below the US Capital Markets industry average of 23.7x and is also below its peer group average of 26.6x. This substantial discount could indicate the market is underestimating the company’s earnings potential or is focusing mainly on short-term headwinds. If market conditions stabilize or performance improves, the stock price could move closer to these sector benchmarks.

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

Result: Price-to-Earnings of 8x (UNDERVALUED)

However, ongoing revenue declines and weak recent returns could limit any short-term recovery, especially if market sentiment remains negative.

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

Another View: Discounted Cash Flow Says Undervalued

Looking from another angle, our SWS DCF model estimates Virtus Investment Partners’ fair value at $241.22, while the stock currently trades at $162.32. This suggests the company is undervalued by about 32%. This sizable gap may point to overlooked long-term value, or it could reflect market concerns.

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 849 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’re ready to form your own perspective or dig deeper into the data, you can dive in and put together your take in just a few minutes. Do it your way

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

Looking for More Ways to Grow Your Portfolio?

Smart investors never put all their eggs in one basket. Give yourself a tactical edge by using these powerful tools to spot what's next before most others catch on.

• Accelerate your search for outsized potential by targeting these 3606 penny stocks with strong financials with robust balance sheets and unexpected financial strength.
• Tap into mega trends by tracking these 26 AI penny stocks with exposure to artificial intelligence, automation, and tomorrow’s disruptive technologies.
• Maximize your passive income by identifying these 20 dividend stocks with yields > 3% offering attractive yields and steady payouts to boost your investment returns.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com