Virtus Convertible & Income Fund Common Shares of Beneficial Interest (NCV)

FairStock Score: 65/100 — STEADY

Key Financials

Strengths

• Generates $6 million in annual free cash flow (1.6% yield on market cap)
• Solid return on equity of 16.5% above cost of capital
• Conservative balance sheet with debt-to-equity of just 0.22, providing financial flexibility
• Attractive 10.0% dividend yield providing steady income returns

Concerns

• Weak Piotroski F-Score of 1/9 suggests deteriorating financial quality across multiple dimensions
• Altman Z-Score of 1.5 places it in the financial distress zone—elevated bankruptcy risk

AI Analysis

Virtus Convertible & Income Fund Common Shares of Beneficial Interest is a micro-cap financial services company valued at $372 million. Revenue stands at $22 million. From a quality standpoint, Virtus shows weak Piotroski F-Score of 1/9 signaling deteriorating fundamentals and distressed Altman Z-Score of 1.5 warrants caution. On valuation, the stock is deeply undervalued on a P/E basis at 4.4x, with offers a 62% margin of safety vs Graham Number of $43. The 10.0% dividend yield adds an income component for patient holders. Our composite FairStock Score of 65/100 reflects above-average fundamentals overall. This combination of reasonable valuation, solid returns, and conservative leverage makes it worth a closer look for value-oriented portfolios.

Bull Case

The market underappreciates Virtus's consistent 16% ROE at just 4x earnings—a re-rating toward sector peers could unlock 30-50% upside. With $6 million in annual free cash flow (1.6% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

Macro headwinds or sector-specific disruption could pressure margins, particularly if competitive intensity increases in the financial services space. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer