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Velocity Financial (VEL)
NYSE:VEL
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Velocity Financial
(NYSE:VEL)
Rating:68Neutral
Price Target:―
Positive Factors
Earnings
Velocity Financial, Inc. reported core EPS of $0.73, which was significantly higher than the estimated $0.52 and the consensus of $0.53.
Financial Health
The book value increased to $15.62, up from $14.87, indicating a positive change in the company's financial health.
Loan Demand
Velocity is seeing strong loan demand as banks limit their lending activities.
Negative Factors
Credit Quality
Non-performing loans were 10.7% of the portfolio, up slightly from 10.64% last quarter.
Market Valuation
Despite a strong franchise in a fragmented lending market, there is perceived better relative value in specialty finance, leading to an Underweight rating.
Velocity Financial (VEL) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$733.41M
Dividend YieldN/A
Average Volume (3M)97.57K
Price to Earnings (P/E)8.7
Beta (1Y)0.44
Revenue Growth35.12%
EPS Growth25.28%
CountryUS
Employees309
SectorFinancial
Sector Strength72
IndustryFinancial - Mortgages
Share Statistics
EPS (TTM)0.73
Shares Outstanding38,438,580
10 Day Avg. Volume136,963
30 Day Avg. Volume97,572
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap8.61
Enterprise Value/Revenue12.36
Enterprise Value/Gross Profit19.68
Enterprise Value/Ebitda18.86
Forecast
1Y Price Target
$20.50Price Target Upside7.61% Upside
Rating ConsensusHold
Number of Analyst Covering2
Velocity Financial Business Overview & Revenue Model
Company DescriptionVelocity Financial, Inc. operates as a real estate finance company in the United States. It primarily originates and manages investor loans secured by 14 unit residential rental and small commercial properties. The company offers its products through a network of independent mortgage brokers. Velocity Financial, Inc. was founded in 2004 and is headquartered in Westlake Village, California.
How the Company Makes MoneyVelocity Financial primarily makes money through the interest income generated from its loan portfolio. The company extends loans to real estate investors and small business owners, earning interest over the life of these loans. Additionally, Velocity Financial generates revenue through loan origination fees, which are charges for processing new loan applications. The company also benefits from the sale of loans in the secondary market, where it can earn gains on the sale of loans it has originated. Strategic partnerships with real estate investment firms and financial institutions further enhance its ability to underwrite and service a diverse range of real estate transactions, contributing to its overall earnings.
Velocity Financial Earnings Call Summary
Earnings Call Date:Aug 07, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Oct 30, 2025
Earnings Call Sentiment Positive
Velocity Financial reported strong financial performance with record net income and loan production, significant portfolio growth, and successful securitizations. Despite a relatively high nonperforming loan rate, the company's strong liquidity position and nonperforming asset resolution efforts contributed positively.Q2-2025 Updates
Positive Updates
Record Quarterly Results
Velocity Financial reported record quarterly results with net income increasing 76% and new loan production up 72% versus Q2 '24.
Revenue and Pretax Income Growth
Revenue grew by $31 million, and pretax income increased by $14 million, boosting core pretax return on equity to 24%.
Portfolio Growth
The portfolio increased by nearly $1.4 billion year-over-year, with commercial properties representing $770 million and residential properties $600 million.
Successful Securitizations
Completed 4 securitizations, issuing just under $1 billion in securities, which freed up $53.5 million of cash for portfolio growth.
Strong Liquidity Position
Increased liquidity to $139 million, with plenty of warehouse capacity to fund growth.
Consistent Loan Production
Record loan production of over $725 million in UPB, a 13.3% increase from the previous quarter.
Nonperforming Loan Resolution
Nonperforming asset resolution gains were $3.6 million or 3.5% of about $104 million of NPA UPB resolved.
Negative Updates
Nonperforming Loan Rate
Nonperforming loan rate was at 10.3%, though it has remained consistent over the last five quarters.
Company Guidance
During the Velocity Financial Second Quarter 2025 Conference Call, the company reported robust financial performance, with net income increasing by 76% and new loan production rising by 72% compared to the second quarter of 2024. Revenue grew by $31 million, and pre-tax income increased by $14 million, driving the core pre-tax return on equity to 24%. The portfolio expanded by nearly $1.4 billion year-over-year, with a 30.8% growth, as commercial properties contributed approximately $770 million and residential properties added $600 million. The company completed four securitizations, issuing nearly $1 billion in securities, enhancing liquidity to $139 million. The net interest margin (NIM) climbed to 3.82%, up 47 basis points from the previous quarter, primarily due to the recapture of delinquent interest on nonperforming loans. The weighted average coupon on the portfolio was 9.67%, with a low loan-to-value ratio of 65.8%. Despite a slight decrease in nonperforming loans to 10.3%, the company achieved positive asset resolution gains of $3.6 million. Looking ahead, Velocity Financial anticipates continued growth in loan originations, driven by strong market conditions and robust investor demand.Velocity Financial Financial Statement Overview
Summary
Velocity Financial has demonstrated strong financial growth, with notable improvements in net income and EBIT margins. However, the absence of total revenue data for 2024 and historical high debt levels raise concerns. The company has effectively strengthened its equity position and cash flow management, but continued focus on revenue generation and debt management is crucial for maintaining stability.Income Statement
Velocity Financial has shown consistent revenue growth over the years, with a notable increase in EBIT margin from 17.05% in 2020 to 77% in 2023. However, the absence of TTM data for 2024 makes it challenging to assess the most recent performance. The net profit margin has also improved from 26.95% in 2020 to 51.94% in 2023, indicating strong profitability. Despite these strengths, the lack of reported gross profit margin and zero total revenue in 2024 raises concerns about revenue sustainability.65
Positive
Balance Sheet
The company's balance sheet reflects an improving equity position, with stockholders' equity growing from $219.59M in 2020 to $516.94M in 2024. The equity ratio improved from 10.44% in 2020 to 9.35% in 2023, indicating a stable capital structure. However, the total debt to equity ratio was high in previous years, which could pose financial risks if not managed properly. The significant reduction in total debt by 2024 is a positive sign, but the absence of total debt data for 2024 complicates full assessment.60
Neutral
Cash Flow
Velocity Financial's cash flow statements indicate a positive trend, with free cash flow growth and consistent operating cash flow. The free cash flow to net income ratio improved significantly in 2024, reflecting efficient cash management. However, a sharp decline in operating cash flow from 2020 to 2024 suggests possible challenges in generating cash from operations. Despite these fluctuations, the company effectively managed its financing activities to support growth.70
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 511.13M | 451.01M | 131.72M | 253.54M | 190.99M | 172.99M |
| Gross Profit | 320.99M | 177.65M | 131.72M | 94.33M | 61.91M | 162.74M |
| EBITDA | 334.89M | 0.00 | 0.00 | 201.78M | 0.00 | 0.00 |
| Net Income | 80.51M | 68.42M | 52.27M | 32.21M | 29.22M | 17.78M |
Balance Sheet | ||||||
| Total Assets | 6.48B | 5.53B | 4.40B | 3.75B | 2.81B | 2.10B |
| Cash, Cash Equivalents and Short-Term Investments | 79.56M | 49.90M | 40.57M | 45.25M | 36.13M | 13.27M |
| Total Debt | 5.71B | 4.86B | 3.84B | 3.28B | 2.38B | 1.73B |
| Total Liabilities | 5.87B | 5.01B | 3.97B | 3.37B | 2.47B | 1.89B |
| Stockholders Equity | 597.89M | 516.94M | 433.44M | 376.81M | 341.11M | 219.59M |
Cash Flow | ||||||
| Free Cash Flow | 26.56M | 37.47M | 48.66M | 48.35M | 57.29M | 54.17M |
| Operating Cash Flow | 26.90M | 37.76M | 48.84M | 48.67M | 57.62M | 54.89M |
| Investing Cash Flow | -1.48B | -1.05B | -584.73M | -908.24M | -656.48M | 87.74M |
| Financing Cash Flow | 1.47B | 1.02B | 535.77M | 874.02M | 626.17M | -149.89M |
Velocity Financial Technical Analysis
Positive
19.05
Price Trends
18.12
Positive
17.69
Positive
18.51
Positive
Market Momentum
0.40
Negative
62.79
Neutral
57.33
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VEL, the sentiment is Positive. The current price of 19.05 is above the 20-day moving average (MA) of 18.11, above the 50-day MA of 18.12, and above the 200-day MA of 18.51, indicating a bullish trend. The MACD of 0.40 indicates Negative momentum. The RSI at 62.79 is Neutral, neither overbought nor oversold. The STOCH value of 57.33 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for VEL.
Velocity Financial Risk Analysis
Velocity Financial disclosed 60 risk factors in its most recent earnings report. Velocity Financial reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Velocity Financial Peers Comparison
Overall Rating
UnderperformOutperform
Sector (68)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
68 Neutral | $17.84B | 12.03 | 10.32% | 3.73% | 9.70% | 0.76% | |
68 Neutral | $733.41M | 8.73 | 15.02% | ― | 35.12% | 25.28% | |
67 Neutral | $5.64B | 15.18 | 10.05% | 1.11% | 20.77% | 96.22% | |
61 Neutral | $2.91B | 26.72 | 6.26% | 3.06% | 11.18% | 24.94% | |
58 Neutral | $1.24B | 51.21 | 2.12% | 2.49% | 34.62% | -7.94% | |
57 Neutral | $671.78M | ― | -23.67% | ― | 6.60% | 44.77% | |
56 Neutral | $950.85M | ― | -9.46% | ― | 17.57% | 55.46% |
* Financial Sector Average
Performance Comparison
VEL
Velocity Financial
19.05
0.40
2.14%
ECPG
Encore Capital
41.75
-7.83
-15.79%
WD
Walker & Dunlop
86.87
-16.09
-15.63%
PFSI
PennyMac Financial
108.51
4.50
4.33%
LDI
loanDepot
2.10
-0.53
-20.15%
GHLD
Guild Holdings
19.96
5.48
37.85%
Velocity Financial Corporate Events
Financial Disclosures
Velocity Financial Releases Q1 2025 Earnings Presentation
Neutral
May 2, 2025
Velocity Financial has released its first quarter 2025 earnings presentation on its Investor Relations website. The information provided is intended for furnishing purposes and is not deemed filed under the Securities Exchange Act, nor incorporated into other filings unless specifically referenced.
Spark’s Take on VEL Stock
According to Spark, TipRanks’ AI Analyst, VEL is a Neutral.
Velocity Financial’s stock score reflects a blend of strong financial performance and attractive valuation, tempered by bearish technical indicators. The earnings call highlighted robust growth and a positive outlook, yet concerns over non-performing loans and zero revenue reporting in 2024 weigh on the overall assessment. Continued focus on revenue generation and debt management will be critical for future stability.
To see Spark’s full report on VEL stock, click here.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.