Victory Capital Holdings, Inc. (NASDAQ: VCTR)

Sector: Financial Services Industry: Asset Management CIK: 0001570827
Market Cap 5.13 Bn
P/B 10.13
P/E 74.57
P/S 10.48
ROIC (Qtr) 9.60
Div Yield % 0.72
Rev 1y % (Qtr) 60.08
Total Debt (Qtr) 971.99 Mn
Debt/Equity (Qtr) 0.41
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About

Victory Capital Holdings, Inc. (VCTR) is a diversified global asset management firm that manages $166.6 billion in total assets as of December 31, 2023. The company operates in the asset management industry and provides specialized investment strategies to institutions, intermediaries, retirement platforms, and individual investors. Victory Capital's main business activities involve offering a wide array of investment products, including actively and passively managed mutual funds, rules-based and active exchange-traded funds (ETFs), institutional...

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Investment thesis

Bull case

  • Strong operating cash flow of 332.22M provides 4.40x coverage of SG&A expenses 75.44M, showing efficient operational cost management.
  • Robust free cash flow of 328.51M exceeds capital expenditure of 3.71M by 88.47x, indicating strong organic growth funding capability.
  • Strong free cash flow of 328.51M provides 6.13x coverage of acquisition spending 53.61M, indicating disciplined M&A strategy.
  • Operating cash flow of 332.22M provides strong 2.55x coverage of operating expenses 130.45M, showing operational efficiency.
  • Strong tangible asset base of 480.26M provides 8.96x coverage of acquisition spending 53.61M, enabling strategic growth.

Bear case

  • Operating cash flow of 332.22M provides thin coverage of dividend payments of (143.83M) with a -2.31 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of 328.51M represents just -21.81x of debt issuance (15.06M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Operating cash flow of 332.22M is outpaced by equity issuance of (238.38M) (-1.39 ratio), indicating concerning reliance on equity markets for funding operations.
  • Tax assets of 0 provide limited offset against tax liabilities of 477.87M, which is 0x, indicating potential future cash flow pressure from tax obligations.
  • Cash position of 115.74M provides only 2.13x coverage of interest expenses of 54.22M, indicating potential refinancing risks in a rising rate environment.

Product and Service Breakdown of Revenue (2024)

Contract with Customer, Sales Channel Breakdown of Revenue (2024)

Peer comparison

Companies in the Asset Management
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 BLK BlackRock, Inc. 199.59 Bn 85.40 21.98 15.04 Bn
2 BN BROOKFIELD Corp /ON/ 103.94 Bn 31.52 5.64 262.97 Bn
3 AMP Ameriprise Financial Inc 88.69 Bn 55.02 7.20 5.89 Bn
4 BX Blackstone Inc. 88.51 Bn 49.39 10.93 12.89 Bn
5 KKR KKR & Co. Inc. 55.86 Bn 28.33 13.23 53.12 Bn
6 STT State Street Corp 46.52 Bn 21.77 3.91 34.72 Bn
7 NTRS Northern Trust Corp 34.14 Bn 33.31 6.71 15.64 Bn
8 RJF Raymond James Financial Inc 32.89 Bn 37.63 4.14 5.10 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.26 0.94
EV to Cash from Ops. EV/CFO 26.25 41.10
EV to Debt EV to Debt 5.46 15.28
EV to EBIT EV/EBIT 43.72 23.47
EV to EBITDA EV/EBITDA 35.43 47.80
EV to Free Cash Flow [EV/FCF] EV/FCF 26.74 38.62
EV to Market Cap EV to Market Cap 1.03 7.81
EV to Revenue EV/Rev 10.83 27.38
Price to Book Value [P/B] P/B 10.13 2.34
Price to Earnings [P/E] P/E 74.57 11.81
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.45 4.66
Dividend Payout Ratio % Div Payout % (Qtr) 47.60 -5.56
Dividend per Basic Share Div per Share (Qtr) 1.89 1.73
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 38.09 49.83
Interest Coverage Int. cover (Qtr) 8.29 25.16
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -93.49 -35.10
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -38.52 15.43
Dividend Growth (1y) % Div 1y % (Qtr) 31.71 1.65
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 5.37 -90.82
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 14.65 35.24
EBIT Growth (1y) % EBIT 1y % (Qtr) 8.46 -22.13
EBT Growth (1y) % EBT 1y % (Qtr) 13.36 -163.05
EPS Growth (1y) % EPS 1y % (Qtr) -3.41 -20.61
FCF Growth (1y) % FCF 1y % (Qtr) -4.32 220.21
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 26.41 -53.96
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.28 0.22
Cash Payout Ratio Cash Payout (Qtr) 0.48 0.36
Cash Ratio Cash Ratio 0.00 0.38
Current Ratio Current Ratio 0.00 0.86
Debt to Equity Ratio Debt/Equity (Qtr) 0.41 0.70
Interest Cover Ratio Int Coverage (Qtr) 8.29 25.16
Times Interest Earned Times Interest Earned (Qtr) 8.29 25.16
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 43.70 -114.76
EBIT Margin % EBIT Margin % (Qtr) 38.60 -127.24
EBT Margin % EBT Margin % (Qtr) 33.95 -150.97
Gross Margin % Gross Margin % (Qtr) 55.20 67.88
Net Profit Margin % Net Margin % (Qtr) 22.30 -148.68