VEL

Velocity Financial is a vertically integrated investor-real-estate lender that has compounded net income from $29.2M (FY2021) to $105M (FY2025) — a >3.5x lift in four years — with FY2025 alone delivering +53.5% net income growth and +44% diluted EPS growth to $2.75. At $17.64, the stock trades at just 6.4x trailing earnings on a business the MD&A says earned a 17.5% return on average equity and a 24.4% pre-tax ROAE in 2025, with a 3.61% portfolio net interest margin on a $6.5B UPB book yielding 9.45%. That is a deep mismatch between price and demonstrated profitability, and the 15.6% derived ROE confirms equity is being deployed productively rather than diluted away.

The filing language explains the structural shape of the balance sheet that scares casual screeners: liabilities/equity of 9.97x is not bank-style recklessness — the MD&A discloses 46 completed securitizations issuing $10.6B in non-recourse securities since 2011, meaning most of the $6.71B liability stack is match-funded portfolio debt against a 65.2% weighted-average LTV first-lien collateral pool spread across 48 states. The January 2026 issuance of $500M of 9.375% Senior Notes maturing 2031 termed-out near-term corporate funding needs, and retained earnings grew 53.2% to $302M, so equity is being built organically alongside the book.