Velocity Financial, Inc. Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now
As you might know, Velocity Financial, Inc. (NYSE:VEL) last week released its latest first-quarter, and things did not turn out so great for shareholders. The analysts look to have been far too optimistic in the lead-up to these results, with revenues of (US$13m) coming in 35% below what they had expected. Statutory earnings per share of US$0.10 fell 52% short. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
View our latest analysis for Velocity Financial
Taking into account the latest results, the consensus forecast from Velocity Financial's dual analysts is for revenues of US$75.7m in 2021, which would reflect a solid 9.1% improvement in sales compared to the last 12 months. Velocity Financial is also expected to turn profitable, with statutory earnings of US$0.61 per share. Before this earnings report, the analysts had been forecasting revenues of US$83.7m and earnings per share (EPS) of US$0.78 in 2021. The analysts seem less optimistic after the recent results, reducing their sales forecasts and making a pretty serious reduction to earnings per share numbers.
The average price target climbed 6.0% to US$11.00despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that Velocity Financial's rate of growth is expected to accelerate meaningfully, with the forecast 12% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 9.0% over the past year. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 3.6% annually. So it's clear with the acceleration in growth, Velocity Financial is expected to grow meaningfully faster than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Velocity Financial. Sadly they also cut their revenue estimates, although at least the company is expected to perform a bit better than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.
Before you take the next step you should know about the 2 warning signs for Velocity Financial that we have uncovered.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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