Velocity Financial (VEL) AI Stock Analysis

• Market Cap: $789.28M
• Dividend Yield: N/A
• Average Volume (3M): 70.03K
• Price to Earnings (P/E): 8.6
• Beta (1Y): 0.19
• Revenue Growth: 36.73%
• EPS Growth: 27.50%
• Country: US
• Employees: 309
• Sector: Financial
• Sector Strength: 70
• Industry: Financial - Mortgages
• EPS (TTM): 0.69
• Shares Outstanding: 38,900,030
• 10 Day Avg. Volume: 102,573
• 30 Day Avg. Volume: 70,034
• PEG Ratio: 0.32
• Price to Book (P/B): 1.24
• Price to Sales (P/S): 1.32
• P/FCF Ratio: 17.05
• Enterprise Value/Market Cap: 0.87
• Enterprise Value/Revenue: 1.19
• Enterprise Value/Gross Profit: 2.31
• Enterprise Value/Ebitda: 2.47
• 1Y Price Target: $22.50
• Price Target Upside: 9.76% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 72 Outperform
• Price Target: $22.50 ▲(9.76% Upside)

The score is driven primarily by solid profitability and cash conversion, tempered by high balance-sheet leverage. Valuation is supportive with a low P/E, and technicals are constructive with price above key moving averages. Earnings-call and event-driven positives (strong operating momentum, funding diversification, NPL sale) add support, while REO/charge-off impacts and high-cost debt issuance remain key watch items.

Positive Factors

Cash Conversion

Near-100% conversion of net income into free cash flow indicates high-quality earnings and strong internal liquidity generation. This durable cash conversion supports organic growth, servicing debt and underwriting pipelines without constant equity raises, reducing financing dependence over months.

Diversified Funding Access

Establishing a single-counterparty securitization and expanding capital markets access materially diversifies funding beyond warehouses. This structural funding option lowers transaction costs, enhances liquidity flexibility and reduces refinancing risk, strengthening the balance sheet over the medium term.

Market Share & Origination Growth

Sustained, outsized origination growth and a focused niche on investor real estate loans show strong product-market fit. Durable expansion in an underserved segment supports scale economies, fee capture and repeat borrowers, underpinning revenue growth and competitive positioning over quarters.

Negative Factors

High Financial Leverage

Very high leverage for a mortgage lender amplifies sensitivity to credit cycles and funding shocks. Elevated debt levels constrain capital flexibility, raise refinancing risk on warehouse/securitization facilities, and can force asset sales or tighter underwriting in stress, affecting durable earnings.

Elevated Asset Quality Stress

Persistently high nonperforming loan levels near 9-10% reflect structural credit risk in the portfolio. This increases expected loss provisioning, depresses net yields and cashflow stability, and can erode capital cushions if resolution timelines or recoveries lengthen over several quarters.

Reporting/Data Inconsistencies

Inconsistent financial reporting (e.g., TTM debt shown as zero despite multiyear leverage) reduces transparency, complicates risk assessment and stress testing. Persistent data issues hinder credible monitoring of solvency and funding needs, raising structural governance and disclosure concerns.

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

Profitability and growth look solid (TTM revenue up ~10%, net margin ~23%) with strong cash conversion (free cash flow ~99% of net income). The main constraint is balance-sheet risk: very high leverage (debt-to-equity ~9x in 2024) plus noted data inconsistencies (e.g., TTM debt shown as zero) that reduce confidence and raise risk sensitivity to funding/credit conditions.

Income Statement

TTM (Trailing-Twelve-Months) shows solid top-line momentum with revenue up ~10% versus the prior period, alongside healthy profitability (net margin ~23%). Profit dollars are also higher versus 2024 (net income ~$90M vs ~$68M). A key watchout is data consistency: several historical operating profit margin fields appear negative/zero despite positive operating profit dollars in those years, which reduces confidence in margin comparability across periods.

Balance Sheet

The annual balance sheet reflects high leverage for a mortgage lender, with debt-to-equity around ~9x in 2024 (and similarly elevated in prior years), which can amplify risk in weaker credit or funding environments. Equity has grown over time and returns on equity are respectable (~13% in 2024; ~15.5% in TTM), but the capital structure remains a clear constraint. Additionally, TTM shows total debt as zero, which conflicts with the multi-year trend and suggests a reporting/data issue that limits how aggressively this can be scored.

Cash Flow

Cash generation appears steady and high-quality: free cash flow has closely tracked net income across periods (roughly ~99% of net income in both TTM and 2024), suggesting earnings are translating well into cash. TTM free cash flow growth is very strong (~109%), though prior-year free cash flow growth was slightly negative in 2024, indicating some variability. Operating cash flow is positive each year, but coverage-style fields are often shown as zero, limiting deeper interpretation of cash flow resilience.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	582.46M	482.78M	131.72M	248.38M	181.31M	165.84M
Gross Profit	298.52M	210.56M	131.72M	90.03M	75.61M	60.90M
EBITDA	279.31M	98.39M	0.00	46.67M	42.20M	25.57M
Net Income	90.37M	68.42M	52.27M	32.21M	29.22M	17.78M
Balance Sheet
Total Assets	6.96B	5.53B	4.40B	3.75B	2.81B	2.10B
Cash, Cash Equivalents and Short-Term Investments	98.96M	50.11M	40.76M	45.42M	36.13M	13.91M
Total Debt	0.00	4.86B	3.84B	3.28B	2.38B	1.73B
Total Liabilities	6.32B	5.01B	3.97B	3.37B	2.47B	1.88B
Stockholders Equity	634.26M	516.94M	433.44M	376.81M	341.11M	219.59M
Cash Flow
Free Cash Flow	55.50M	37.47M	60.87M	48.35M	57.29M	53.32M
Operating Cash Flow	55.92M	37.76M	61.05M	48.67M	57.62M	54.89M
Investing Cash Flow	-1.63B	-1.05B	-596.95M	-908.24M	-656.48M	87.74M
Financing Cash Flow	1.62B	1.02B	535.77M	874.02M	626.17M	-149.89M

Velocity Financial Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 20.50
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• 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 20.5 is above the 20-day moving average (MA) of 19.41, above the 50-day MA of 19.34, and above the 200-day MA of 18.35, indicating a bullish trend. The MACD of 0.32 indicates Negative momentum. The RSI at 61.71 is Neutral, neither overbought nor oversold. The STOCH value of 69.32 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	72 Outperform	$789.28M	8.56	16.04%	―	36.73%	27.50%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
WD	65 Neutral	$2.14B	18.66	6.46%	4.42%	12.08%	20.13%
PFSI	59 Neutral	$5.19B	10.74	12.55%	0.90%	25.42%	190.85%
ECPG	58 Neutral	$1.23B	-30.56	-4.51%	―	10.85%	77.59%
LDI	47 Neutral	$726.45M	-5.94	-25.72%	―	3.91%	27.78%

Velocity Financial Corporate Events

Velocity Financial Completes Major Unsecured Notes Offering

On January 30, 2026, Velocity Commercial Capital, a wholly owned subsidiary of Velocity Financial, completed a $500 million private offering of 9.375% senior unsecured notes due 2031, guaranteed by Velocity Financial on a senior unsecured basis but not by its other subsidiaries, with interest payable semi-annually starting August 15, 2026, and a structure that includes optional redemption features, change-of-control repurchase protection, and customary covenant and default provisions. After underwriting fees and expenses, Velocity Financial received approximately $487 million in net proceeds and plans to allocate about $222.7 million to redeem its outstanding 7.125% senior secured notes due 2027 and use the remaining funds for general corporate purposes, including potential repayment of warehouse and revolving facilities and up to $75 million for a contemplated acquisition, a refinancing and capital-raising move that reshapes the company’s debt profile and provides additional flexibility to support growth in its investor real estate lending business.

The most recent analyst rating on (VEL) stock is a Buy with a $22.50 price target. To see the full list of analyst forecasts on Velocity Financial stock, see the VEL Stock Forecast page.

Velocity Financial Announces $500 Million Senior Notes Offering

On January 28, 2026, Velocity Financial’s subsidiary Velocity Commercial Capital, LLC entered into a purchase agreement to issue $500 million of 9.375% senior notes due 2031 in a private offering to qualified institutional buyers and certain non-U.S. investors, with closing expected on or about January 30, 2026. The company plans to use about $222.7 million of the roughly $487 million in expected net proceeds to redeem its existing 7.125% senior secured notes due 2027 and to allocate the remainder to general corporate purposes, including potential debt repayment on warehouse and revolving facilities and up to $75 million for a possible acquisition, a move that would refinance nearer-term obligations while providing capital for balance-sheet flexibility and potential expansion.

The most recent analyst rating on (VEL) stock is a Buy with a $21.50 price target. To see the full list of analyst forecasts on Velocity Financial stock, see the VEL Stock Forecast page.

Velocity Financial Plans $500M Notes Offering After Strong 2025

On January 26, 2026, Velocity Financial, Inc. announced that its subsidiary Velocity Commercial Capital, LLC plans an unregistered offering of up to $500 million in senior notes due 2031, guaranteed on a senior unsecured basis by the parent company and sold to qualified institutional buyers and certain non-U.S. investors, a move that could bolster its funding base and support continued loan growth. The company also reported strong preliminary unaudited results for the fourth quarter and full year 2025, including at least $35 million in quarterly net income and $105 million for the year, robust increases in earnings per share, approximately $2.7 billion in 2025 loan originations, a 28% rise in total portfolio unpaid principal balance to about $6.5 billion, improved asset quality with nonperforming loans reduced to between 8.5% and 8.6% of total UPB, and stockholders’ equity of at least $675 million, underscoring significant expansion in its investor real estate lending franchise ahead of final audited results due March 11, 2026.

The most recent analyst rating on (VEL) stock is a Buy with a $22.50 price target. To see the full list of analyst forecasts on Velocity Financial stock, see the VEL Stock Forecast page.

Velocity Financial Sells $133.2M in Non-Performing Loans

On December 16, 2025, Velocity Financial announced an agreement to sell $133.2 million in unpaid principal balance of non-performing loans. This transaction may impact the company’s financial standing and operations by potentially improving liquidity and reducing risk exposure, which could influence its market positioning and stakeholder interests.

The most recent analyst rating on (VEL) stock is a Buy with a $22.00 price target. To see the full list of analyst forecasts on Velocity Financial stock, see the VEL Stock Forecast page.

Velocity Financial Releases Q3 2025 Earnings Presentation

Velocity Financial has posted its third quarter 2025 earnings presentation on its Investor Relations website. The presentation is available for reference but is not filed for purposes of the Securities Exchange Act, indicating it is for informational purposes only and not subject to certain legal liabilities.

The most recent analyst rating on (VEL) stock is a Buy with a $22.00 price target. To see the full list of analyst forecasts on Velocity Financial stock, see the VEL Stock Forecast page.