Velocity Financial (VEL) AI Stock Analysis

• Market Cap: $692.61M
• Dividend Yield: N/A
• Average Volume (3M): 176.14K
• Price to Earnings (P/E): 9.6
• Beta (1Y): 0.34
• Revenue Growth: 32.62%
• EPS Growth: 16.91%
• Country: US
• Employees: 309
• Sector: Financial
• Sector Strength: 74
• Industry: Financial - Mortgages
• EPS (TTM): 0.55
• Shares Outstanding: 36,491,520
• 10 Day Avg. Volume: 242,839
• 30 Day Avg. Volume: 176,138
• PEG Ratio: -0.42
• Price to Book (P/B): 0.82
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 6.37
• Enterprise Value/Market Cap: 5.11
• Enterprise Value/Revenue: 2.42
• Enterprise Value/Gross Profit: 12.12
• Enterprise Value/Ebitda: 4.25
• 1Y Price Target: $22.33
• Price Target Upside: 17.65% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 3

• Rating: 68 Neutral
• Price Target: ―

Velocity Financial exhibits robust financial performance, with strong loan origination growth and improved profitability. Despite some technical weakness and challenges in revenue reporting, the company's positive earnings call and attractive valuation indicate potential for future growth. Continued focus on revenue sustainability and debt management will be important factors for long-term success.

Positive Factors

Financial Performance

Velocity Financial, Inc. reported fourth-quarter earnings with Core EPS well above consensus, showing financial strength.

Financial Position

Velocity Financial was able to raise $7.3M of new common equity capital through an at the market offering program, strengthening its financial position.

Loan Demand

Velocity is seeing strong loan demand as banks limit their lending activities.

Negative Factors

Market Conditions

The longer-term earnings impact connected to tariffs could be mixed, considering the headline uncertainty it puts on macro conditions and consumer spending.

Market Rating

The company is rated Underweight despite having a strong franchise in a fragmented lending market.

Non-performing Loans

Non-performing loans were 10.7% of the portfolio, up slightly from 10.64% last quarter.

Velocity Financial Business Overview & Revenue Model

Company Description

Velocity Financial, Inc. operates as a real estate finance company in the United States. It primarily originates and manages investor loans secured by 1–4 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 Money

Velocity 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 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.

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.

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.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
400.50M	211.74M	131.72M	94.33M	75.31M	69.95M
	Gross Profit
292.09M	211.74M	131.72M	80.34M	61.91M	57.16M
	EBIT
208.72M	101.40M	76.85M	22.23M	39.79M	23.13M
	EBITDA
231.92M	0.00	0.00	0.00	0.00	0.00
	Net Income Common Stockholders
69.58M	68.42M	52.27M	32.21M	29.22M	17.78M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
51.68M	49.90M	40.57M	45.25M	36.13M	13.27M
	Total Assets
5.97B	5.53B	4.40B	3.75B	2.81B	2.10B
	Total Debt
0.00	4.86B	3.84B	3.28B	2.38B	1.73B
	Net Debt
-51.68M	4.81B	3.80B	3.23B	2.34B	1.72B
	Total Liabilities
5.41B	5.01B	3.97B	3.37B	2.47B	1.89B
	Stockholders Equity
563.19M	516.94M	433.44M	376.81M	341.11M	219.59M
Cash Flow		Free Cash Flow
30.38M	37.47M	48.66M	48.35M	57.29M	53.32M
	Operating Cash Flow
30.71M	37.76M	48.84M	48.67M	57.62M	54.89M
	Investing Cash Flow
-1.23B	-1.05B	-584.73M	-908.24M	-656.48M	87.74M
	Financing Cash Flow
1.22B	1.02B	535.77M	874.02M	626.17M	-149.89M

Velocity Financial Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 18.98
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: 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 18.98 is above the 20-day moving average (MA) of 17.43, above the 50-day MA of 17.27, and above the 200-day MA of 18.83, indicating a neutral trend. The MACD of 0.51 indicates Negative momentum. The RSI at 60.54 is Neutral, neither overbought nor oversold. The STOCH value of 78.15 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for VEL.

Velocity Financial Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
VEL	68 Neutral	$692.61M	9.59	13.62%	―	32.62%	16.91%
Sector *	64 Neutral	$12.87B	9.76	7.85%	78.04%	12.07%	-7.94%
ECPG	63 Neutral	$910.62M	―	-13.05%	―	13.17%	43.16%
PFSI	61 Neutral	$4.93B	14.64	9.32%	1.26%	23.79%	121.61%
GHLD	57 Neutral	$976.70M	22.61	3.71%	3.18%	42.92%	64.72%
WD	49 Neutral	$2.31B	23.34	5.62%	3.92%	6.68%	6.08%
LDI	48 Neutral	$465.17M	―	-29.48%	―	3.76%	16.19%

Velocity Financial Corporate Events

Velocity Financial Releases Q1 2025 Earnings Presentation

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.