Velocity Financial (VEL)
NYSE:VEL
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Velocity Financial
(NYSE:VEL)
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Rating:63Neutral
Price Target:
$18.50
▼(-7.04% Downside)
Action:Reiterated
Date:05/26/26
The score is driven mainly by solid financial performance (strong profitability and cash conversion, tempered by leverage/history-driven risk) and an inexpensive valuation (low P/E). These positives are partially offset by weak technical momentum (below major moving averages, negative MACD, low RSI) and credit-risk-related items highlighted on the earnings call (still-elevated NPLs and valuation allowances).
Positive Factors
Strong profitability & cash conversion
Sustained high trailing net margins and nearly one-to-one cash conversion indicate earnings are largely backed by cash flow. Over months this supports reinvestment into origination, servicing and loss absorption capacity, improving long-term earnings reliability and internal funding ability.
Negative Factors
Elevated nonperforming loans
A double-digit NPL ratio represents a material portion of assets that can depress interest income, require workout costs and lead to future charge-offs. Even with improvement, sustained elevated NPLs can strain capital, reduce cash flow predictability and heighten earnings volatility over coming quarters.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong profitability & cash conversion
Sustained high trailing net margins and nearly one-to-one cash conversion indicate earnings are largely backed by cash flow. Over months this supports reinvestment into origination, servicing and loss absorption capacity, improving long-term earnings reliability and internal funding ability.
Read all positive factors
Velocity Financial (VEL) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$679.51M
Dividend YieldN/A
Average Volume (3M)70.03K
Price to Earnings (P/E)6.1
Beta (1Y)0.22
Revenue Growth38.14%
EPS Growth34.02%
CountryUS
Employees309
SectorFinancial
Sector Strength70
IndustryFinancial - Mortgages
Share Statistics
EPS (TTM)2.83
Shares Outstanding39,255,280
10 Day Avg. Volume102,573
30 Day Avg. Volume70,034
Financial Highlights & Ratios
PEG Ratio0.20
Price to Book (P/B)1.14
Price to Sales (P/S)1.07
P/FCF Ratio42.79
Enterprise Value/Market Cap10.74
Enterprise Value/Revenue10.60
Enterprise Value/Gross Profit15.45
Enterprise Value/Ebitda20.18
Forecast
1Y Price Target
$22.17Price Target Upside11.39% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
EPS Forecast (FY)2.8
Revenue Forecast (FY)$226.10M
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 14 unit residential rental and small commercial properties. The company offers its products thr...
How the Company Makes Money
Velocity Financial makes money primarily through net interest income and loan-related fees tied to its real estate-secured lending business. It originates loans (such as investor 1–4 unit residential rental loans and small commercial real estate l...
Velocity Financial Earnings Call Summary
Earnings Call Date:May 06, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Jul 30, 2026
Earnings Call Sentiment Positive
Overall, the call conveyed a positive tone: strong earnings growth, double-digit year-over-year portfolio expansion, attractive new-production yields, solid NIM, effective NPL resolution performance and a successful $500M unsecured debt issuance that materially strengthened liquidity and reduced short-term warehouse reliance. The company did acknowledge an elevated but improving nonperforming loan rate, sizeable fair-value valuation allowances on NPLs, some REO markdowns and early-year seasonality in originations; however management framed these as manageable and supported by disciplined underwriting and servicing capabilities.Positive Updates
Strong Earnings Growth
Core net income increased 30% year-over-year in Q1 2026, demonstrating meaningful profitability improvement.
Negative Updates
Elevated Nonperforming Loan Rate
Nonperforming loan rate was 10.1% at quarter end—improved by 70 basis points year-over-year but still a material portion of the portfolio.
Read all updates
Q1-2026 Updates
Positive
Negative
Strong Earnings Growth
Core net income increased 30% year-over-year in Q1 2026, demonstrating meaningful profitability improvement.
Read all positive updates
Company Guidance
The company guided to a stable 3.5% NIM for 2026 and said the portfolio should continue to grow with origination volumes picking up in the second half of the year; management also expects ROEs to remain in the high teens. Key metrics cited alongside that guidance include Q1 UPB originations of ~$639M across ~1,600 loans (Q1 portfolio UPB $6.8B, +5.3% QoQ, +25.6% YoY), Q1 NIM 3.56%, portfolio yield/WAC ~9.75% (new HFI originations WAC 10.1%, 5-quarter avg 10.3%), weighted‑avg LTV on new originations ~64.9% (quarter LTV 62.5%, portfolio LTV just under 65%), NPL rate 10.1% (down 70 bps YoY) with NPL resolutions of ~$70M UPB recovering $4.6M (≈102.3% recovery including $1.6M of gains), CECL reserve $4.9M (25 bps of amortized cost), combined NPL valuation allowance 83 bps, total liquidity $329M ($87M cash, $242M available on unfinanced collateral), available warehouse capacity ~$835.6M (max $935M), $500M unsecured debt issued (used to pay $215M secured note and reduce warehouse lines), recourse debt/equity 1.0x and total debt/equity 9.6x, and active securitizations of ~$335M (2026-1) and ~$178M (2026-P1).Velocity Financial Financial Statement Overview
Summary
Income Statement
73
Positive
Balance Sheet
60
Neutral
Cash Flow
66
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 688.55M | 714.45M | 482.78M | 131.72M | 248.38M | 181.31M |
| Gross Profit | 472.14M | 681.04M | 210.56M | 131.72M | 90.03M | 75.61M |
| EBITDA | 361.59M | 511.29M | 98.39M | 0.00 | 46.67M | 42.20M |
| Net Income | 108.53M | 105.05M | 68.42M | 52.27M | 32.21M | 29.22M |
Balance Sheet | ||||||
| Total Assets | 7.59B | 7.38B | 5.53B | 4.40B | 3.75B | 2.81B |
| Cash, Cash Equivalents and Short-Term Investments | 112.05M | 92.10M | 50.11M | 40.76M | 45.42M | 36.13M |
| Total Debt | 6.72B | 6.54B | 4.86B | 3.84B | 3.28B | 2.38B |
| Total Liabilities | 6.90B | 6.71B | 5.01B | 3.97B | 3.37B | 2.47B |
| Stockholders Equity | 696.40M | 672.53M | 516.94M | 433.44M | 376.81M | 341.11M |
Cash Flow | ||||||
| Free Cash Flow | 26.32M | 17.88M | 37.47M | 60.87M | 48.35M | 57.29M |
| Operating Cash Flow | 26.67M | 18.16M | 37.76M | 61.05M | 48.67M | 57.62M |
| Investing Cash Flow | -1.47B | -1.52B | -1.05B | -596.95M | -908.24M | -656.48M |
| Financing Cash Flow | 1.48B | 1.68B | 1.02B | 535.77M | 874.02M | 626.17M |
Velocity Financial Technical Analysis
Negative
19.90
Price Trends
18.35
Negative
18.70
Negative
18.73
Negative
Market Momentum
-0.35
Negative
38.01
Neutral
33.51
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VEL, the sentiment is Negative. The current price of 19.9 is above the 20-day moving average (MA) of 17.52, above the 50-day MA of 18.35, and above the 200-day MA of 18.73, indicating a bearish trend. The MACD of -0.35 indicates Negative momentum. The RSI at 38.01 is Neutral, neither overbought nor oversold. The STOCH value of 33.51 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for VEL.
Velocity Financial Risk Analysis
Velocity Financial disclosed 56 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
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
70 Outperform | $1.67B | 5.72 | 30.70% | ― | 33.57% | ― | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
63 Neutral | $679.51M | 6.10 | 16.69% | ― | 38.14% | 34.02% | |
56 Neutral | $4.36B | 8.29 | 12.02% | 0.90% | 24.55% | 43.82% | |
52 Neutral | $1.71B | 22.67 | 4.08% | 4.42% | 12.71% | -30.75% | |
42 Neutral | $422.28M | -3.45 | -32.25% | ― | 14.29% | 21.88% |
* Financial Sector Average
VEL
Velocity Financial
17.13
0.31
1.84%
ECPG
Encore Capital
78.01
39.72
103.73%
WD
Walker & Dunlop
48.32
-16.33
-25.26%
PFSI
PennyMac Financial
80.60
-13.21
-14.08%
LDI
loanDepot
1.18
-0.09
-7.09%
Velocity Financial Corporate Events
Executive/Board ChangesShareholder Meetings
Velocity Financial Shareholders Reelect Board, Approve Pay, Auditor
Positive
May 26, 2026
On May 21, 2026, Velocity Financial held its Annual Meeting of Shareholders, at which all incumbent directors were re-elected with substantial shareholder support, reinforcing continuity in the company’s board leadership and governance struc...
Financial DisclosuresRegulatory Filings and Compliance
Velocity Financial Releases Q1 2026 Earnings Presentation
Neutral
May 7, 2026
Velocity Financial has published its management earnings presentation for the first quarter of 2026 on its investor relations website, providing shareholders and analysts with detailed insight into its recent financial performance. The company has...
Financial DisclosuresRegulatory Filings and Compliance
Velocity Financial Releases Q4 and Full-Year 2025 Presentation
Neutral
Mar 12, 2026
Velocity Financial has posted its management presentation covering fourth-quarter and full-year 2025 earnings on the investor relations section of its website, making the materials available to shareholders and analysts seeking additional detail o...
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.