Victory Capital Holdings, Inc. (VCTR) stock intrinsic value fair value estimate & owner earnings analysis

Victory Capital is a San Antonio-based asset manager that runs a group of independent investment franchises and earns fees as a percentage of the assets it manages. Its fee income is sold through mutual funds, ETFs, separate accounts and retirement vehicles. Assets under management were $313.8 billion at the end of 2025, up from $171.9 billion a year earlier, almost entirely because of the April 1, 2025 acquisition of Amundi US (about $114.6 billion of assets) plus $37.7 billion of market gains. Amundi received common and Series A preferred shares in the deal. The preferred shares are economically identical to common stock, so we count them in the per-share figures (roughly 83 million shares in total, against about 62 million of reported common shares). How we measure earnings. We start from operating cash flow, remove swings in working capital, and subtract share-based pay as a real cost. Capital spending is tiny (about $4 million in 2025), so this hardly matters. On that basis owner earnings per share were $3.72 in 2020, $4.36 in 2021, $4.26 in 2022, $3.78 in 2023, $5.17 in 2024 and $5.36 in 2025. Because the business changed in April 2025, we value it from the combined company. 2025 owner earnings were about $432 million, but that contains only nine months of Amundi US and $29.7 million of one-time integration costs, and it counts a $94 million working-capital outflow (largely a bonus and deferred-compensation payout and a build in fee receivables) as timing. Adjusting for a full year of Amundi US and the integration costs, and being cautious about the working-capital add-back, we use about $450 million a year, or roughly $5.40 per share, as the starting level. Growth check: owner earnings grew 27% in total in 2025, but per share they grew only about 4%, because the growth came from issuing shares to acquire Amundi US. We assume no growth in year one. Amortization of acquired contracts is added back as a non-cash cost; the $312 million of contracts acquired from Amundi US that are being written off over about 6.9 years are a wasting asset, which is why we assume gradual shrinkage rather than growth. What we credit and what we leave out. We give no credit for market appreciation, for further acquisitions (the company does large deals, not small repeatable ones), for cost savings not yet in the reported results, or for the Amundi distribution agreement expanding sales abroad (a 15-year exclusive agreement for distribution outside the U.S., but only 17% of assets are managed for non-U.S. clients today). Buybacks are not counted as growth because they spend the same cash we are already valuing. Base case (about $71 per share). Owner earnings of about $5.40 per share decline about 1.5% a year, continuing indefinitely. The evidence is that the company lost $7.4 billion of net client assets in 2024 and $4.5 billion in 2025, driven by outflows from mid cap and small cap equity strategies, and its fee assets shrink unless markets or acquisitions replace them. Offsetting that, the earnings base is long-lived: 78% of strategies by assets have beaten their benchmarks over ten years and clients are spread over more than 60 countries and many product types. Bear case (about $37 per share). Outflows revert to the 2024 pace (about 4% of assets a year) and, because most costs are tied to assets or fixed, owner earnings fall about 7% a year from the lower 2025 actual level of about $5.20 per share. The company carries about $970 million of long-term debt and paid about $80 million of cash interest in 2025; that interest is already deducted in owner earnings but does not shrink as fees do, and there is also $87.6 million of acquisition consideration still payable. We also note that restructuring costs and fair-value changes on earn-outs have recurred with each acquisition. Bull case (about $105 per share). Reported earnings in the first half of 2026 ($251.5 million of net income and $256.4 million of operating cash flow) suggest the combined company is earning well above 2025 levels as integration savings arrive; on that run-rate owner earnings would be about $6.60 per share, and outflows stop (they narrowed from $7.4 billion to $4.5 billion between 2024 and 2025) so earnings hold flat. We stop at flat rather than assume growth. What would make this wrong. If the company's first-half 2026 results prove to be a one-off, or if outflows widen while it also makes another large acquisition funded with debt, the base case is too high. If integration savings continue and the flows stabilize, it is too low. We could not verify the split of first-half 2026 cash flow between seasonal bonus timing and lasting improvement, so we did not raise the starting level on that data alone. Our margin-of-safety price sits near the bear case because the shares are exposed to markets, client outflows and leverage.