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Velocity Financial (VEL) Soars 36.6%: Is Further Upside Left in the Stock?

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Velocity Financial (VEL - Free Report) shares rallied 36.6% in the last trading session to close at $12.50. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 3.8% gain over the past four weeks.

Velocity Financial touched a new 52-week high of $12.75. Investors’ bullish sentiments stemmed from its solid first quarter 2021 performance. The company’s core earnings of 20 cents per share were in line with the Zacks Consensus Estimate.

Further, the company witnessed 30% sequential jump in loan production volume to $233 million in unpaid principal balance. This was driven by solid demand for investor loans. Also, during the quarter, provision for loan losses came in at $0.1 million, down drastically from $0.4 million recorded in the prior quarter.

Price and Consensus

Price Consensus Chart for VEL


This company is expected to post quarterly earnings of $0.15 per share in its upcoming report, which represents a year-over-year change of -11.76%. Revenues are expected to be $20.2 million, up 21.18% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Velocity Financial, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on VEL going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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