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Velocity Financial
(NYSE:VEL)
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Rating:62Neutral
Price Target:
$19.00
▲(4.80% Upside)
Action:Reiterated
Date:08/27/26
The score is held back primarily by balance sheet/leverage risk and softer recent financial momentum (TTM revenue contraction and modest cash-flow deterioration), despite strong profitability. Valuation is a key support with a low P/E, while technicals are currently weak (below major moving averages). The latest earnings call and the Toorak platform acquisition add upside via expected origination growth, sustained NIM above target, and a shift toward more fee-based revenue, but elevated NPLs and execution risk keep the overall score in the low-60s.
Positive Factors
Portfolio Growth
A 19% expansion in the loan portfolio indicates sustained origination and asset growth. Increasing scale can support recurring interest income, improve operating leverage and strengthen the company’s position in investor-focused real estate lending.
Negative Factors
High Leverage
Mortgage lending depends heavily on borrowed funding, and elevated leverage increases sensitivity to credit losses, asset values and funding availability. It can constrain strategic flexibility and amplify earnings volatility during weaker housing or credit conditions.
Read all positive and negative factors
Positive Factors
Negative Factors
Portfolio Growth
A 19% expansion in the loan portfolio indicates sustained origination and asset growth. Increasing scale can support recurring interest income, improve operating leverage and strengthen the company’s position in investor-focused real estate lending.
Read all positive factors
Velocity Financial (VEL) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$715.80M
Dividend YieldN/A
Average Volume (3M)70.03K
Price to Earnings (P/E)6.4
Beta (1Y)0.21
Revenue Growth31.59%
EPS Growth17.94%
CountryUS
Employees368
SectorFinancial
Sector Strength70
IndustryFinancial - Mortgages
Share Statistics
EPS (TTM)2.78
Shares Outstanding39,481,457
10 Day Avg. Volume102,573
30 Day Avg. Volume70,034
Financial Highlights & Ratios
PEG Ratio0.21
Price to Book (P/B)1.14
Price to Sales (P/S)1.07
P/FCF Ratio42.79
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$20.50Price Target Upside13.07% Upside
Rating ConsensusHold
Number of Analyst Covering2
EPS Forecast (FY)2.81
Revenue Forecast (FY)$267.52M
Velocity Financial Business Overview & Revenue Model
Company Description
Operating across the United States, Velocity Financial, Inc. functions as a specialized real estate finance firm. Its core business involves generating and overseeing investment loans, which are typically secured by 1-4 unit residential rental pro...
How the Company Makes Money
Velocity Financial primarily makes money through interest income and fees generated from originating and holding real estate-backed loans for investment. Its core revenue stream is net interest income: the company earns interest on its loan portfo...
Velocity Financial Earnings Call Summary
Earnings Call Date:Aug 05, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Oct 29, 2026
Earnings Call Sentiment Positive
The call emphasized continued portfolio growth, strong origination units, robust funding and liquidity, effective NPL resolution, and compounding book value — all signs of operational and financial strength. Headwinds included a modest YoY decline in NIM income and GAAP earnings pressure driven by a higher effective tax rate, a decrease in REO profitability versus the prior year, and a still-elevated NPL ratio (albeit improved). On balance, the positives around growth, funding access, margin above target, low charge-offs, and capital efficiency outweigh the contained challenges discussed.Positive Updates
Strong Portfolio Growth
Total loan portfolio reached $7.0B UPB, up 19% year-over-year and 2.2% quarter-over-quarter, reflecting continued origination and portfolio compounding.
Negative Updates
GAAP Net Income and EPS Pressure from Taxes
Modest year-over-year dip in GAAP net income and EPS was attributed primarily to a higher effective tax rate rather than operating weakness.
Read all updates
Q2-2026 Updates
Positive
Negative
Strong Portfolio Growth
Total loan portfolio reached $7.0B UPB, up 19% year-over-year and 2.2% quarter-over-quarter, reflecting continued origination and portfolio compounding.
Read all positive updates
Company Guidance
Management guided that origination volumes should increase in the back half of 2026 (July was the strongest month for submissions), while they expect to sustain NIM above 3.5% (Q2 portfolio NIM was 3.66%) and continue compounding book value and earnings (diluted book value per share $18.43); they emphasized credit discipline (NPLs 9.6% of HFI, combined non‑performing valuation allowances ~42 bps) and healthy economics with Q2 loan production of ~$672.6M across ~1,600 loans, total portfolio UPB ~$7.0B (up 19% YoY), WAC on new HFI originations ~10% (5‑quarter avg 10.2%), portfolio coupon ~9.7% and weighted average LTV ~61.1%; funding markets are supportive with $240M liquidity and $662M available warehouse capacity ( $975M max line), and they plan to manage capital access as needed—staying below roughly 10x leverage (recourse D/E 1.2x, total D/E 9.7x) using equity or debt depending on execution.Velocity Financial Financial Statement Overview
Summary
Income Statement
74
Positive
Balance Sheet
55
Neutral
Cash Flow
48
Neutral
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 701.29M | 714.45M | 482.78M | 131.72M | 248.38M | 181.31M |
| Gross Profit | 553.43M | 681.04M | 210.56M | 131.72M | 90.03M | 75.61M |
| EBITDA | 475.00M | 511.29M | 98.39M | 0.00 | 46.67M | 42.20M |
| Net Income | 107.70M | 105.05M | 68.42M | 52.27M | 32.21M | 29.22M |
Balance Sheet | ||||||
| Total Assets | 7.96B | 7.38B | 5.53B | 4.40B | 3.75B | 2.81B |
| Cash, Cash Equivalents and Short-Term Investments | 245.20M | 92.10M | 50.11M | 40.76M | 45.42M | 36.13M |
| Total Debt | 7.05B | 6.54B | 4.86B | 3.84B | 3.28B | 2.38B |
| Total Liabilities | 7.24B | 6.71B | 5.01B | 3.97B | 3.37B | 2.47B |
| Stockholders Equity | 721.54M | 672.53M | 516.94M | 433.44M | 376.81M | 341.11M |
Cash Flow | ||||||
| Free Cash Flow | 22.43M | 17.88M | 37.47M | 60.87M | 48.35M | 57.29M |
| Operating Cash Flow | 22.79M | 18.16M | 37.76M | 61.05M | 48.67M | 57.62M |
| Investing Cash Flow | -1.23B | -1.52B | -1.05B | -596.95M | -908.24M | -656.48M |
| Financing Cash Flow | 1.36B | 1.68B | 1.02B | 535.77M | 874.02M | 626.17M |
Velocity Financial Technical Analysis
Negative
18.13
Price Trends
17.82
Negative
18.05
Negative
18.50
Negative
Market Momentum
0.11
Positive
44.27
Neutral
27.43
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 18.13 is above the 20-day moving average (MA) of 18.03, above the 50-day MA of 17.82, and below the 200-day MA of 18.50, indicating a bearish trend. The MACD of 0.11 indicates Positive momentum. The RSI at 44.27 is Neutral, neither overbought nor oversold. The STOCH value of 27.43 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 |
|---|---|---|---|---|---|---|---|
74 Outperform | $2.17B | 7.37 | 29.83% | ― | 28.84% | ― | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
62 Neutral | $715.80M | 6.36 | 15.83% | ― | 31.59% | 17.94% | |
59 Neutral | $3.85B | 9.64 | 9.14% | 1.42% | 24.08% | 0.60% | |
58 Neutral | $1.40B | 34.44 | 2.33% | 5.60% | 9.22% | -65.41% | |
44 Neutral | $312.39M | -2.91 | -26.91% | ― | 17.11% | 9.17% |
* Financial Sector Average
VEL
Velocity Financial
17.69
-1.38
-7.24%
ECPG
Encore Capital
100.15
58.73
141.79%
WD
Walker & Dunlop
40.29
-41.01
-50.44%
PFSI
PennyMac Financial
72.90
-34.55
-32.16%
LDI
loanDepot
0.88
-1.16
-56.76%
Velocity Financial Corporate Events
Business Operations and StrategyM&A Transactions
Velocity Financial to Acquire Toorak Capital Operating Platform
Positive
Aug 27, 2026
On August 26, 2026, Velocity Commercial Capital, a subsidiary of Velocity Financial, agreed to acquire the equity interests of newly formed entities housing Toorak Capital’s operating platform, in a cash transaction with a base purchase pric...
Financial DisclosuresRegulatory Filings and Compliance
Velocity Financial posts Q2 2026 earnings presentation
Neutral
Aug 5, 2026
Velocity Financial has posted management’s second quarter 2026 earnings presentation to its investor relations website, providing stakeholders with updated information on the firm’s recent financial performance and operations. The pres...
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.