Virtus Investment Partners, Inc. (NYSE: VRTS)

Sector: Financial Services Industry: Asset Management CIK: 0000883237
Market Cap 951.20 Mn
P/B 1.04
P/E 6.98
P/S 1.08
ROIC (Qtr) 3.78
Div Yield % 6.63
Rev 1y % (Qtr) -4.69
Total Debt (Qtr) 2.52 Bn
Debt/Equity (Qtr) 2.74
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About

Virtus Investment Partners, Inc. (VRTS) operates in the investment management industry, offering a diverse range of services and products to its clients. The company's main business activities encompass investment management services through its affiliated investment managers, distribution services, and administrative services. It is listed on the New York Stock Exchange under the ticker symbol VRTS. Virtus Investment Partners, Inc. has a multi-manager, multi-style approach, offering investment strategies from both affiliated and unaffiliated managers....

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Investment thesis

Bull case

  • Robust free cash flow of 69.57M exceeds capital expenditure of 7.87M by 8.84x, indicating strong organic growth funding capability.
  • Cash position of 462.24M provides exceptional 86.30x coverage of minority interest expenses 5.36M, indicating strong liquidity.
  • Strong tangible asset base of 3.17B provides 4.30x coverage of intangibles 736.49M, indicating robust asset quality.
  • Operating cash flow of 77.44M provides strong 9.84x coverage of capital expenditure 7.87M, enabling organic growth.
  • Cash position of 462.24M fully covers payables of 51.66M by 8.95x, showing strong vendor relationship management.

Bear case

  • Operating cash flow of 77.44M barely covers its investment activities of (17.56M), with a coverage ratio of -4.41, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 77.44M provides thin coverage of dividend payments of (64.19M) with a -1.21 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 462.24M provide limited coverage of acquisition spending of (9.69M), which is -47.69x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • The company's operating cash flow of 77.44M shows concerning coverage of stock compensation expenses of 27.81M, with a 2.78 ratio indicating potential earnings quality issues.
  • Operating cash flow of 77.44M provides minimal 1.36x coverage of tax expenses of 56.91M, suggesting potential tax planning inefficiencies or unsustainable tax positions.

Product and Service 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 0.78 0.94
EV to Cash from Ops. EV/CFO 39.46 41.10
EV to Debt EV to Debt 1.21 15.28
EV to EBIT EV/EBIT 8.61 23.47
EV to EBITDA EV/EBITDA 12.60 47.80
EV to Free Cash Flow [EV/FCF] EV/FCF 43.93 38.62
EV to Market Cap EV to Market Cap 3.21 7.81
EV to Revenue EV/Rev 3.48 27.38
Price to Book Value [P/B] P/B 1.04 2.34
Price to Earnings [P/E] P/E 6.98 11.81
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 2.12 4.66
Dividend Payout Ratio % Div Payout % (Qtr) 45.50 -5.56
Dividend per Basic Share Div per Share (Qtr) 6.75 1.73
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 65.56 49.83
Interest Coverage Int. cover (Qtr) 2.19 25.16
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -30.23 -35.10
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 48.20 15.43
Dividend Growth (1y) % Div 1y % (Qtr) -15.09 1.65
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -0.13 -90.82
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 3.04 35.24
EBIT Growth (1y) % EBIT 1y % (Qtr) -0.04 -22.13
EBT Growth (1y) % EBT 1y % (Qtr) 14.32 -163.05
EPS Growth (1y) % EPS 1y % (Qtr) 17.96 -20.61
FCF Growth (1y) % FCF 1y % (Qtr) -34.27 220.21
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -1.09 -53.96
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.22 0.22
Cash Payout Ratio Cash Payout (Qtr) 0.75 0.36
Cash Ratio Cash Ratio (Qtr) 0.00 0.38
Current Ratio Curr Ratio (Qtr) 0.00 0.86
Debt to Equity Ratio Debt/Equity (Qtr) 2.74 0.70
Interest Cover Ratio Int Coverage (Qtr) 2.19 25.16
Times Interest Earned Times Interest Earned (Qtr) 2.19 25.16
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 47.70 -114.76
EBIT Margin % EBIT Margin % (Qtr) 40.43 -127.24
EBT Margin % EBT Margin % (Qtr) 21.99 -150.97
Gross Margin % Gross Margin % (Qtr) 100.00 67.88
Net Profit Margin % Net Margin % (Qtr) 15.50 -148.68