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Here's Why You Should Hold Virtu Financial Stock in Your Portfolio
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Virtu Financial, Inc. (VIRT - Free Report) , a leading financial services company, is well-poised to grow on the back of its diversified business and rising interest and dividends income. Headquartered in New York, Virtu Financial has a market cap of $4.8 billion.
Strong revenue contribution from the Market Making segment due to higher trading income will likely benefit the stock. We expect its capture rate from the unit to improve in the coming days, along with a decline in costs. Courtesy of solid prospects, this Zacks Rank #3 (Hold) stock is worth holding in your portfolio at the moment.
VIRT’s Price Performance
A glimpse at the company’s price trend reveals that the stock has had an impressive run in the past year. Shares of Virtu Financial have surged 67.4% in the past year, outperforming the industry, sector and the S&P 500 Index’s 21.8%, 29.3% and 25.3% growth, respectively.
Image Source: Zacks Investment Research
VIRT Growth Drivers
The retail momentum is likely to continue, benefiting the stock. Although volatility remained low in the second quarter, its growth initiatives, like expanding into options, cryptocurrency, ETF block trading, IPO investing and others, position it well for long-term growth. The company expects to support upcoming Ethereum ETFs as a market maker, highlighting opportunities in this sector.
The expansion of its Execution Services business, driven by advancements in technology and integration of new solutions, poises the company’s top line well for growth in the future, despite fluctuations in market volatility.
We expect its net brokerage, exchange, clearance fees and payments for order flow to continue on its declining path, boosting margins. The metric fell 16.9% and 17.9% in 2022 and 2023, respectively. Additionally, it exited the second quarter with cash and cash equivalents of $684.8 million while short-term borrowings, net, totaled $73.7 million. Its financial flexibility enables it to take shareholder-friendly moves.
In the second quarter of 2024, Virtu Financial bought back shares worth around $31 million. VIRT announced a cash dividend of 24 cents per share. Its dividend yield of 3.1% is higher than the industry average of 2%.
VIRT Earnings Estimates
The Zacks Consensus Estimate for VIRT’s 2024 earnings is pegged at $2.86 per share, indicating a year-over-year improvement of 55.4%. The estimate remained stable over the past month. The consensus mark for 2025 earnings suggests a further 1.9% year-over-year growth. Virtu Financial beat on earnings in three of the last four quarters, missed on one occasion, with an average surprise of 9.9%. This is depicted in the figure below.
The stock is currently trading at a discount. Its forward 12-month price-to-earnings ratio of 10.74X is below the industry average of 13.81X. The company's underlying fundamentals are not weak at all, as evidenced by a Value Score of A. These positive factors are likely to help it maintain its share growth trajectory and continue outperforming the industry, making it an excellent candidate to hold.
Image Source: Zacks Investment Research
Key Risk
However, there is one factor that investors should keep an eye on.
Virtu Financial’s performance might suffer if the economy makes a soft landing as VIRT gains traction from market volatility. As such, it will have to depend on its diversification efforts. Nevertheless, we believe that a systematic and strategic plan of action will drive its growth in the long term.
Commerce Bancshares’ earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8%. The Zacks Consensus Estimate for CBSH’s 2024 earnings indicates an improvement of 8.8%, while the consensus estimate for revenues implies growth of 4.3% from the corresponding year-ago reported figures. The consensus mark for CBSH’s earnings has moved 1.5% north in the past 30 days.
The bottom line of Amalgamated Financial beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 7.1%. The Zacks Consensus Estimate for AMAL’s 2024 earnings indicates an improvement of 11.9%, while the consensus estimate for revenues implies growth of 7% from the corresponding year-ago reported figures. The consensus mark for AMAL’s earnings has moved 6.1% north in the past 30 days.
Esquire Financial’s earnings outpaced estimates in three of the last four quarters and missed the mark once, the average surprise being 1.7%. The Zacks Consensus Estimate for ESQ’s 2024 earnings indicates an improvement of 12.5%, while the consensus estimate for revenues implies growth of 9.1% from the corresponding year-ago reported figures. The consensus mark for ESQ’s earnings has moved 3.4% north in the past 60 days.
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Here's Why You Should Hold Virtu Financial Stock in Your Portfolio
Virtu Financial, Inc. (VIRT - Free Report) , a leading financial services company, is well-poised to grow on the back of its diversified business and rising interest and dividends income. Headquartered in New York, Virtu Financial has a market cap of $4.8 billion.
Strong revenue contribution from the Market Making segment due to higher trading income will likely benefit the stock. We expect its capture rate from the unit to improve in the coming days, along with a decline in costs. Courtesy of solid prospects, this Zacks Rank #3 (Hold) stock is worth holding in your portfolio at the moment.
VIRT’s Price Performance
A glimpse at the company’s price trend reveals that the stock has had an impressive run in the past year. Shares of Virtu Financial have surged 67.4% in the past year, outperforming the industry, sector and the S&P 500 Index’s 21.8%, 29.3% and 25.3% growth, respectively.
Image Source: Zacks Investment Research
VIRT Growth Drivers
The retail momentum is likely to continue, benefiting the stock. Although volatility remained low in the second quarter, its growth initiatives, like expanding into options, cryptocurrency, ETF block trading, IPO investing and others, position it well for long-term growth. The company expects to support upcoming Ethereum ETFs as a market maker, highlighting opportunities in this sector.
The expansion of its Execution Services business, driven by advancements in technology and integration of new solutions, poises the company’s top line well for growth in the future, despite fluctuations in market volatility.
We expect its net brokerage, exchange, clearance fees and payments for order flow to continue on its declining path, boosting margins. The metric fell 16.9% and 17.9% in 2022 and 2023, respectively. Additionally, it exited the second quarter with cash and cash equivalents of $684.8 million while short-term borrowings, net, totaled $73.7 million. Its financial flexibility enables it to take shareholder-friendly moves.
In the second quarter of 2024, Virtu Financial bought back shares worth around $31 million. VIRT announced a cash dividend of 24 cents per share. Its dividend yield of 3.1% is higher than the industry average of 2%.
VIRT Earnings Estimates
The Zacks Consensus Estimate for VIRT’s 2024 earnings is pegged at $2.86 per share, indicating a year-over-year improvement of 55.4%. The estimate remained stable over the past month. The consensus mark for 2025 earnings suggests a further 1.9% year-over-year growth. Virtu Financial beat on earnings in three of the last four quarters, missed on one occasion, with an average surprise of 9.9%. This is depicted in the figure below.
Virtu Financial, Inc. Price and EPS Surprise
Virtu Financial, Inc. price-eps-surprise | Virtu Financial, Inc. Quote
VIRT’s Valuation
The stock is currently trading at a discount. Its forward 12-month price-to-earnings ratio of 10.74X is below the industry average of 13.81X. The company's underlying fundamentals are not weak at all, as evidenced by a Value Score of A. These positive factors are likely to help it maintain its share growth trajectory and continue outperforming the industry, making it an excellent candidate to hold.
Image Source: Zacks Investment Research
Key Risk
However, there is one factor that investors should keep an eye on.
Virtu Financial’s performance might suffer if the economy makes a soft landing as VIRT gains traction from market volatility. As such, it will have to depend on its diversification efforts. Nevertheless, we believe that a systematic and strategic plan of action will drive its growth in the long term.
Stocks to Consider
Some better-ranked stocks in the Finance space are Commerce Bancshares, Inc. (CBSH - Free Report) , Amalgamated Financial Corp. (AMAL - Free Report) and Esquire Financial Holdings, Inc. (ESQ - Free Report) . Commerce Bancshares sports a Zacks Rank #1 (Strong Buy), and Amalgamated Financial and Esquire Financial currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Commerce Bancshares’ earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8%. The Zacks Consensus Estimate for CBSH’s 2024 earnings indicates an improvement of 8.8%, while the consensus estimate for revenues implies growth of 4.3% from the corresponding year-ago reported figures. The consensus mark for CBSH’s earnings has moved 1.5% north in the past 30 days.
The bottom line of Amalgamated Financial beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 7.1%. The Zacks Consensus Estimate for AMAL’s 2024 earnings indicates an improvement of 11.9%, while the consensus estimate for revenues implies growth of 7% from the corresponding year-ago reported figures. The consensus mark for AMAL’s earnings has moved 6.1% north in the past 30 days.
Esquire Financial’s earnings outpaced estimates in three of the last four quarters and missed the mark once, the average surprise being 1.7%. The Zacks Consensus Estimate for ESQ’s 2024 earnings indicates an improvement of 12.5%, while the consensus estimate for revenues implies growth of 9.1% from the corresponding year-ago reported figures. The consensus mark for ESQ’s earnings has moved 3.4% north in the past 60 days.