What Virtus Investment Partners’ Recent Performance Tells Investors

Virtus Investment Partners (VRTS) has drawn attention after recent share moves, with the stock down about 1.6% over the past day and 2.1% over the past week, while showing small gains over the month and past 3 months.

For investors watching returns, the stock’s year to date gain of roughly 0.5% sits alongside a 13.5% decline over the past year and a 24.2% total return decline over three years, offering a mixed picture of recent performance.

Over five years, Virtus Investment Partners shows a total return decline of 19.2%. Some investors may compare this with the company’s fundamentals, including reported revenue of US$878.336 million and net income of US$136.24 million.

Those same investors may also focus on the current share price of US$163.25, the company’s value score of 4, and an indicated intrinsic discount of 24.1276% as they assess how the market is currently pricing Virtus Investment Partners.

Putting this together, Virtus Investment Partners shows weak long term total shareholder returns alongside only modest recent share price momentum. This suggests sentiment has yet to meaningfully recover even at an indicated intrinsic discount.

If you are weighing Virtus against other financial names, it can help to widen the lens and compare it with fast growing stocks with high insider ownership as a source of fresh ideas.

So with a 24.1% indicated intrinsic discount, a value score of 4, and a price target above the current US$163.25 share price, is Virtus genuinely undervalued, or is the market already pricing in its future growth?

Price-to-Earnings of 8.1x: Is it justified?

On a simple headline number, Virtus Investment Partners trades on a P/E of 8.1x, which sits well below both the US Capital Markets industry average and its peer group while the last close remains at $163.25.

The P/E ratio compares the share price to earnings per share, so a lower figure can suggest the market is assigning a lower price to each dollar of current earnings. For an investment manager like Virtus, that often reflects how the market views the durability of fee income and profit margins over time.

Here, Virtus is described as good value based on its P/E of 8.1x compared with the US Capital Markets industry average of 23.6x, and also versus a peer average P/E of 24.2x. That is a wide gap, and it raises a straightforward question for you as an investor: whether the discount reflects concerns about past earnings trends and forecast revenue declines, or whether the market is pricing the shares more harshly than those fundamentals alone would suggest.

Result: Price-to-Earnings of 8.1x (UNDERVALUED)

However, you also need to weigh risks such as a 3.6% revenue decline and a 13.5% 1 year total return decline, which could keep sentiment cautious.

Another View: What Our DCF Model Says

While the P/E of 8.1x points to value compared with the US Capital Markets industry, our DCF model also suggests Virtus Investment Partners is undervalued, with the current $163.25 price sitting below an estimated future cash flow value of $215.16.

That is a sizeable gap in dollar terms. The key question for you is whether the cash flow assumptions behind that $215.16 fair value feel realistic, or if the market is already adjusting for the forecast 3.6% annual revenue decline.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Virtus Investment Partners for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 875 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Virtus Investment Partners Narrative

If you look at this and feel differently, or prefer to test the assumptions yourself, you can build your own view in minutes with Do it your way.

A great starting point for your Virtus Investment Partners research is our analysis highlighting 1 key reward and 3 important warning signs that could impact your investment decision.

Looking for more investment ideas?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.