Velocity Financial (VEL)
NYSE:VEL
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Velocity Financial
(NYSE:VEL)
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Rating:62Neutral
Price Target:
$20.50
▲(0.05% Upside)
Action:DowngradedDate:03/13/26
The score reflects strong earnings-call momentum and an attractive low P/E, partially offset by financial-risk factors (high leverage and weakening operating/free cash flow) and bearish technicals (below key moving averages with negative MACD and oversold readings).
Positive Factors
Originations & Portfolio Growth
Sustained, large originations and portfolio growth signal expanding scale and execution in the investor real-estate niche. Higher volume across >6,600 loans diversifies loan-level risk, increases recurring interest and fee income potential, and supports durable revenue generation over coming quarters.
Negative Factors
High Leverage
A highly leveraged balance sheet, common in mortgage lenders, amplifies sensitivity to credit losses, interest-rate moves, and funding shocks. Even with healthy ROE, elevated leverage constrains capital flexibility, increases refinancing and covenant risk, and makes capital raises or shock-absorption costlier over time.
Read all positive and negative factors
Positive Factors
Negative Factors
Originations & Portfolio Growth
Sustained, large originations and portfolio growth signal expanding scale and execution in the investor real-estate niche. Higher volume across >6,600 loans diversifies loan-level risk, increases recurring interest and fee income potential, and supports durable revenue generation over coming quarters.
Read all positive factors
Velocity Financial (VEL) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$750.96M
Dividend YieldN/A
Average Volume (3M)70.03K
Price to Earnings (P/E)5.5
Beta (1Y)0.23
Revenue Growth36.73%
EPS Growth27.50%
CountryUS
Employees309
SectorFinancial
Sector Strength70
IndustryFinancial - Mortgages
Share Statistics
EPS (TTM)0.93
Shares Outstanding39,235,283
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 Cap9.60
Enterprise Value/Revenue11.27
Enterprise Value/Gross Profit10.59
Enterprise Value/Ebitda14.10
Forecast
1Y Price Target
$21.50Price Target Upside4.93% Upside
Rating ConsensusHold
Number of Analyst Covering2
EPS Forecast (FY)2.57
Revenue Forecast (FY)$236.80M
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:Mar 12, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 30, 2026
Earnings Call Sentiment Positive
The call presents strong operational and financial momentum: record originations, portfolio growth, higher core net income, expanded securitization activity, improved liquidity and a transformative NPL sale that freed working capital. These positives substantially outweigh the manageable negatives — an elevated but improving NPL rate, a one-time-above-normal charge-off loss, notable valuation allowances on fair value loans, and higher funding costs. Management emphasized disciplined underwriting and robust capital markets execution while acknowledging macro interest-rate uncertainty.Positive Updates
Record Core Net Income and Pretax ROE
Core net income increased 52% year-over-year to $111,000,000, driving a record pretax return on equity of 26%.
Negative Updates
Nonperforming Loans Still Elevated
Nonperforming loan rate was 8.5% at year-end (improved from 10.7% prior year) — improvement driven partly by a $129M NPL sale and continued resolutions, but the NPL level remains noteworthy.
Read all updates
Q4-2025 Updates
Positive
Negative
Record Core Net Income and Pretax ROE
Core net income increased 52% year-over-year to $111,000,000, driving a record pretax return on equity of 26%.
Read all positive updates
Company Guidance
Guidance for 2026 is steady and growth-oriented: management expects net interest margins to remain near current levels (about 3.6% portfolio NIM / 3.59% Q4) and to continue growing the loan portfolio while maintaining credit discipline and growing book value and shareholder returns. That outlook is supported by 2025 results — core net income up 52% to $111.0M, pretax ROE of 26%, book value growth of 21%, record originations of $2.7B (+49% YoY) including Q4 production of $634M (+12.6% YoY) across >6,600 loans, nine securitizations and $2.6B in new issuance, a year‑end portfolio of $6.5B UPB (+28.4%) with a 9.7% weighted average coupon (new Q4 HFI coupons ~10%) and average LTVs in the low-60s, a nonperforming loan rate down to 8.5% (from 10.7%), NPL resolutions of $331M with $30M net recoveries (Q4 recoveries $7.6M), sale of $129M NPLs that recognized $13.4M in Q4 and released ~$50M working capital, strong liquidity (~$92M cash / ~$117M total liquidity) and available warehouse capacity (~$600M of ~ $935M max), plus a new $500M five‑year unsecured issuance at 9.38% to lengthen funding — all of which underpin a constructive 2026 outlook.Velocity Financial Financial Statement Overview
Summary
Income Statement
66
Positive
Balance Sheet
52
Neutral
Cash Flow
45
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 714.45M | 482.78M | 131.72M | 248.38M | 181.31M |
| Gross Profit | 681.04M | 210.56M | 131.72M | 90.03M | 75.61M |
| EBITDA | 511.29M | 98.39M | 0.00 | 46.67M | 42.20M |
| Net Income | 105.05M | 68.42M | 52.27M | 32.21M | 29.22M |
Balance Sheet | |||||
| Total Assets | 7.38B | 5.53B | 4.40B | 3.75B | 2.81B |
| Cash, Cash Equivalents and Short-Term Investments | 92.10M | 50.11M | 40.76M | 45.42M | 36.13M |
| Total Debt | 6.54B | 4.86B | 3.84B | 3.28B | 2.38B |
| Total Liabilities | 6.71B | 5.01B | 3.97B | 3.37B | 2.47B |
| Stockholders Equity | 672.53M | 516.94M | 433.44M | 376.81M | 341.11M |
Cash Flow | |||||
| Free Cash Flow | 17.88M | 37.47M | 60.87M | 48.35M | 57.29M |
| Operating Cash Flow | 18.16M | 37.76M | 61.05M | 48.67M | 57.62M |
| Investing Cash Flow | -1.52B | -1.05B | -596.95M | -908.24M | -656.48M |
| Financing Cash Flow | 1.68B | 1.02B | 535.77M | 874.02M | 626.17M |
Velocity Financial Technical Analysis
Positive
20.49
Price Trends
18.69
Positive
18.97
Positive
18.64
Positive
Market Momentum
0.18
Negative
67.90
Neutral
95.82
Negative
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 20.49 is above the 20-day moving average (MA) of 18.01, above the 50-day MA of 18.69, and above the 200-day MA of 18.64, indicating a bullish trend. The MACD of 0.18 indicates Negative momentum. The RSI at 67.90 is Neutral, neither overbought nor oversold. The STOCH value of 95.82 is Negative, 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
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
68 Neutral | $1.61B | 4.92 | 28.19% | ― | 10.85% | 77.59% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
62 Neutral | $750.96M | 5.50 | 16.95% | ― | 36.73% | 27.50% | |
54 Neutral | $4.77B | 16.04 | 12.18% | 0.90% | 25.42% | 190.85% | |
48 Neutral | $1.59B | 35.14 | 3.26% | 4.42% | 12.08% | 20.13% | |
46 Neutral | $313.49M | -6.97 | -24.39% | ― | 3.91% | 27.78% |
* Financial Sector Average
VEL
Velocity Financial
19.47
2.26
13.13%
ECPG
Encore Capital
78.28
48.66
164.28%
WD
Walker & Dunlop
47.85
-24.16
-33.55%
PFSI
PennyMac Financial
93.03
-3.21
-3.33%
LDI
loanDepot
1.43
0.32
28.83%
Velocity Financial Corporate Events
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...
Business Operations and StrategyPrivate Placements and Financing
Velocity Financial Completes Major Unsecured Notes Offering
Positive
Jan 30, 2026
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 bu...
Business Operations and StrategyPrivate Placements and Financing
Velocity Financial Announces $500 Million Senior Notes Offering
Positive
Jan 29, 2026
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...
Business Operations and StrategyFinancial DisclosuresPrivate Placements and Financing
Velocity Financial Plans $500M Notes Offering After Strong 2025
Positive
Jan 26, 2026
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 compan...
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.