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Velocity Financial (VEL) Moves 17.6% Higher: Will This Strength Last?

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Velocity Financial (VEL) shares soared 17.6% in the last trading session to close at $11.64. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 8.4% gain over the past four weeks.

The performance of financial service providers is expected to have improved in the second quarter given the higher interest rates and rise in demand for real estate loans. Investors are also bullish on the sector on expectations of the interest rate hikes this year. This possibly led to the optimistic stance by the investors, which drove Velocity Financial higher.

This company is expected to post quarterly earnings of $0.30 per share in its upcoming report, which represents a year-over-year change of +20%. Revenues are expected to be $25.4 million, up 26.4% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Velocity Financial, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on VEL going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Velocity Financial belongs to the Zacks Financial - Mortgage & Related Services industry. Another stock from the same industry, Walker & Dunlop (WD), closed the last trading session 1% higher at $90. Over the past month, WD has returned -14.1%.

For Walker & Dunlop , the consensus EPS estimate for the upcoming report has remained unchanged over the past month at $1.75. This represents a change of +1.2% from what the company reported a year ago. Walker & Dunlop currently has a Zacks Rank of #4 (Sell).


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