Virtus Investment Partners (VRTS) Added New ETFs And Raised Its Dividend, Is It Still A Bargain?

Virtus Investment Partners (VRTS) is back in focus after converting two Zevenbergen mutual funds into actively managed ETFs and announcing a higher quarterly dividend, developments that may influence how you think about the stock today.

See our latest analysis for Virtus Investment Partners.

Over the past year, Virtus Investment Partners has seen its share price show shorter term momentum, with a 90 day share price return of 16.34%, even as the 1 year total shareholder return declined 11.31%. This hints that recent ETF launches and the higher dividend are being weighed against longer term concerns.

If you are assessing Virtus today and wondering what else could fit into a diversified watchlist, it may be worth scanning 21 top founder-led companies

After the recent ETF conversions and dividend move, Virtus Investment Partners now trades at levels where opinions split between upside still ahead and most of the gains already used up. How does the current valuation stack up against that backdrop?

Price-to-Earnings of 9.2x: Is it justified for Virtus Investment Partners?

On a simple snapshot, Virtus Investment Partners trades on a P/E of 9.2x, which looks low compared with both its Capital Markets peers and the wider industry averages cited below.

The P/E ratio compares the current share price to earnings per share. For a company such as Virtus Investment Partners that earns fees from managing assets, this multiple is one way to see how much investors are currently willing to pay for each dollar of earnings. A lower P/E can reflect caution around future earnings or sector headwinds, but it can also highlight companies that are not being priced in line with their current profit levels.

Simply Wall St’s checks show Virtus Investment Partners trading at a P/E of 9.2x, while the US Capital Markets industry average is 38.5x and the peer average is 23.6x. That is a wide gap between what the market is paying for Virtus and what it pays for comparable companies. This points to the stock being priced more conservatively than many of its peers on this metric alone.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Earnings of 9.2x (UNDERVALUED)

However, you still need to weigh risks such as declining annual revenue and a 5-year total shareholder return that has fallen 35.33%, which challenge the Virtus Investment Partners value case.

Find out about the key risks to this Virtus Investment Partners narrative.

Another View on Virtus Investment Partners Using DCF

The earlier P/E check suggested Virtus Investment Partners looks inexpensive next to peers. Our DCF model offers a second lens. It values the stock at $238.73 a share, compared with the current $167.09 price. That points to a discount of about 30% using this method.

This gap highlights how sensitive valuation can be to assumptions about future cash flows. It raises a practical question for you as an investor: Which feels more reliable right now, the DCF story or the earnings multiple story, and how much weight should each carry in your watchlist decisions?

Look into how the SWS DCF model arrives at its fair value.

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 48 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

This mix of caution and optimism around Virtus Investment Partners will mean different things to different investors, so it is worth looking through the underlying data yourself and deciding how it fits your goals. To balance both sides of the story and spot what matters most for your thesis, review the 1 key reward and 3 important warning signs

Looking for more investment ideas beyond Virtus Investment Partners?

If Virtus Investment Partners is on your radar, do not stop there. Fresh ideas from other corners of the market could be just as important for your watchlist.

• Expand your opportunity set by scanning screener containing 19 high quality undiscovered gems that the wider market may be overlooking despite solid fundamentals.
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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.

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