Virtus Investment Partners (VRTS): Valuation Perspectives Following a Notable Dividend Hike

Virtus Investment Partners (VRTS) just made a move that is likely to grab the attention of both long-time shareholders and those watching from the sidelines. The company’s Board of Directors has approved a new quarterly dividend of $2.40 per share, an increase of 7% from the previous payout. Changes like this often suggest management has a constructive view of future business conditions, especially when paired with a commitment to return additional cash to investors.

This dividend increase comes after a year where the stock experienced volatility. While shares have climbed 16% over the past three months, they are still down about 2% for the year and remain below where they began 2024. The recent rise in the share price coincides with the announcement, which may indicate the market is reassessing Virtus's growth prospects or reducing perceived risks in its business model.

With shares rebounding and a higher dividend now available, some investors may question whether this presents a value opportunity or whether the current price already reflects Virtus’s near-term potential.

Price-to-Earnings of 9.3x: Is it justified?

Virtus Investment Partners trades at a price-to-earnings (P/E) ratio of 9.3x, which is notably lower than both its peer group average of 32.4x and the broader US Capital Markets industry average of 27.1x. This comparison suggests that the stock is currently undervalued relative to similar companies.

The price-to-earnings ratio measures how much investors are willing to pay for each dollar of the company’s earnings. In the capital markets sector, a lower P/E often means the stock may be overlooked or that investors anticipate slower future growth. On the other hand, a higher ratio can indicate stronger growth expectations or a more premium market positioning.

Given Virtus’s current ratio, the market may not be fully pricing in its recent earnings momentum or improved profitability. The company’s performance metrics suggest there could be more value than the market is recognizing, yet investors remain cautious compared to how they value its peers.

Result: Fair Value of $215.83 (UNDERVALUED)

See our latest analysis for Virtus Investment Partners.

However, slowing annual revenue growth and recent negative total returns highlight potential challenges that could affect Virtus Investment Partners’ valuation in the future.

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

Another View: Discounted Cash Flow

Taking a different approach, the SWS DCF model also points to Virtus Investment Partners being undervalued at today’s prices. However, models rarely agree perfectly, so investors may want to consider how much weight to place on this view.

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 have a different perspective or want to dig into the facts yourself, you can easily develop your own narrative in just a few minutes, or simply 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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