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Why Should You Hold Virtu Financial (VIRT) in Your Portfolio?
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Virtu Financial, Inc. (VIRT - Free Report) has been in investors' good books on the back of its strong segmental performances and its gain from market volatility.
This market-making firm offers its services in 36 countries and owns more than 30% market share for retail investor order flow. The company witnessed tremendous volumes last year as it performs well amid market uncertainty. Although the market is cruising toward stability, the company holds is expected to grow in the future as well. Its resilient business model instills investor confidence in the stock. Virtu Financial benefits from advancements in technology as well as its expanded product offerings.
The company managed to beat on earnings in all the trailing four quarters, the average being 23.65%. The stock carries a VGM Score of A. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all the three factors.
Last year, the company reported revenues worth $3.24 billion, up 113% year over year.
Now let’s dig deeper to find out what makes it an investor favorite.
The company continues to benefit from its Investment Technology Group, Inc. buyout that was completed in 2019, which helped it win institutional clients. In around two years from the closure, the transaction contributed to growth in the company’s Execution Services segment.
In 2020 and during the first half of 2021, revenues from this segment grew 32.2% and 5.6% year over year, respectively, on the back of commissions, workflow technology and analytics. We expect the segment to continue performing well, given the current market scenario.
Virtu Financial’s solvency level also remains a positive. The company already paid down debt worth $289 million in 2020. Repayment of debt enabled it to successfully reduce the debt by 16.5% from the 2019-end figure to $1.67 billion as of Dec 31, 2020. In the first six months of 2021, long-term debt dipped 2.2% to $1.6 billion from the level at 2020 end. Virtu Financial has plans to use its free cash flow to decrease the term debt.
On the back of its financial strength, the company deployed capital in the form of dividends for 23 straight quarters. The board members sanctioned the enhancement of share buyback plan to $470 million. It even extended the duration of the same through May 4, 2022. Its dividend yield stands at 3.7%, higher than the industry average of 1.5%.
Robust cash flows should enable the company to maintain its dividend payment policy along with share repurchases. Its intelligent capital management strategy should raise investors’ optimism on the stock.
The metric reflects its efficiency in utilizing its shareholders' funds. Its ROE of 40.1% is higher than the industry average of 20.7%.
Further, this miscellaneous financial service provider’s diversified business strengthens its position for the long haul.
Other companies in the same space, such as TCG BDC, Inc. (CGBD - Free Report) , Houlihan Lokey, Inc. (HLI - Free Report) and PRA Group, Inc. (PRAA - Free Report) have gained 22.5%, 57.7% and 9.9%, respectively.
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Why Should You Hold Virtu Financial (VIRT) in Your Portfolio?
Virtu Financial, Inc. (VIRT - Free Report) has been in investors' good books on the back of its strong segmental performances and its gain from market volatility.
This market-making firm offers its services in 36 countries and owns more than 30% market share for retail investor order flow. The company witnessed tremendous volumes last year as it performs well amid market uncertainty.
Although the market is cruising toward stability, the company holds is expected to grow in the future as well. Its resilient business model instills investor confidence in the stock. Virtu Financial benefits from advancements in technology as well as its expanded product offerings.
The company managed to beat on earnings in all the trailing four quarters, the average being 23.65%. The stock carries a VGM Score of A. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all the three factors.
Last year, the company reported revenues worth $3.24 billion, up 113% year over year.
Now let’s dig deeper to find out what makes it an investor favorite.
The company continues to benefit from its Investment Technology Group, Inc. buyout that was completed in 2019, which helped it win institutional clients. In around two years from the closure, the transaction contributed to growth in the company’s Execution Services segment.
In 2020 and during the first half of 2021, revenues from this segment grew 32.2% and 5.6% year over year, respectively, on the back of commissions, workflow technology and analytics. We expect the segment to continue performing well, given the current market scenario.
Virtu Financial’s solvency level also remains a positive. The company already paid down debt worth $289 million in 2020. Repayment of debt enabled it to successfully reduce the debt by 16.5% from the 2019-end figure to $1.67 billion as of Dec 31, 2020. In the first six months of 2021, long-term debt dipped 2.2% to $1.6 billion from the level at 2020 end. Virtu Financial has plans to use its free cash flow to decrease the term debt.
On the back of its financial strength, the company deployed capital in the form of dividends for 23 straight quarters. The board members sanctioned the enhancement of share buyback plan to $470 million. It even extended the duration of the same through May 4, 2022. Its dividend yield stands at 3.7%, higher than the industry average of 1.5%.
Robust cash flows should enable the company to maintain its dividend payment policy along with share repurchases. Its intelligent capital management strategy should raise investors’ optimism on the stock.
The metric reflects its efficiency in utilizing its shareholders' funds. Its ROE of 40.1% is higher than the industry average of 20.7%.
Further, this miscellaneous financial service provider’s diversified business strengthens its position for the long haul.
Price Performance
Shares of this currently Zacks Rank #3 (Hold) company have gained 15.5% in the past year, outperforming its industry’s growth of 7.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other companies in the same space, such as TCG BDC, Inc. (CGBD - Free Report) , Houlihan Lokey, Inc. (HLI - Free Report) and PRA Group, Inc. (PRAA - Free Report) have gained 22.5%, 57.7% and 9.9%, respectively.