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Unlike other companies, Virtu Financial has been gaining a sweet spot from the coronavirus-led market volatility so far. Being a high-frequency trader, the company took a hit from an uninterrupted financial market in recent years. However, the pandemic proved to be a boon as market volatility soared. The company managed to surpass on earnings thrice in the trailing four quarters (while meeting estimates in one), the average surprise being 13.3%.
Revenues of the company gained on the back of a heightened market disruption, bid-ask spreads, and trading volumes and asset classes. It recently expanded its multi-asset transaction cost model offering with the introduction of Fixed Income Agency Cost Estimator (FI ACE). The new tool will not only help clients take informed decisions about constructing their portfolios but also provide an insight into the transaction costs in the fixed income markets.
Further, the company’s diversified business strengthens its position for the long haul. It is witnessing steady growth in both its customer and non-customer market-making businesses.
In August, the company completed the sale of Match Now to CBOE Global Markets. MATCHNow, an alternative trading system, is the premier provider of dark liquidity to the Canadian equities market and the company expects to cater to a wider audience with this deal.
Its robust Market Making segment has been delivering solid results to date. The segment also witnessed organic growth in its non-customer Market Making business on the back of the recently-launched Marketing Making strategies in Europe, improvement in exchange-traded products block desk and better options capabilities. The Market Making segment also benefited from KCG Holdings Inc.’s quantitative market making strategies. Revenues from this business line skyrocketed 170.9% in the first nine months of 2020.
The company’s Execution Services Segment comprises agency-based trading and trading venues. The segment is consistently gaining from the ITG buyout, which diversified its revenues as well as leveraged its core technology. As of Sep 30, 2020, revenues from this segment grew 39.7% year over year on the back of commissions, workflow technology and analytics.
Virtu Financial's solvency level is a positive. Repayment of debt enabled the company to successfully reduce the same by 16.5% from 2019 end to $1.67 billion as of Sep 30, 2020. Its total debt is 47.5% of capital, lower than the industry’s average of 58.7%. Its times interest earned at third-quarter end stands at 8.9X, higher than the industry's average of 4.9X. Virtu Financial has plans to use its free cash flow to decrease its term debt. Thus, its financial flexibility is impressive.
Is Further Upside Left?
The company’s return on equity — a profitability measure — stands at 52.1%, higher than the industry average of 18.5%.
Given the existing market condition, we expect the company to continue gaining traction from solid segmental contributions and the COVID-led market unpredictability.
Its 2020 earnings estimate is pegged at $5.35, indicating a 457.29% surge from the year-ago reported figure.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early. See the 5 high-tech stocks now>>
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Virtu Financial (VIRT) Soars 49.2% YTD: More Room to Run?
Virtu Financial Inc. (VIRT - Free Report) has been favored by investors on the back of its growth amid the current market volatility.
Over the past 60 days, the company has witnessed its 2020 and 2021 estimates move 3.9% and 8.6% north, respectively.
Year to date, this currently Zacks Rank #3 (Hold) stock has surged 49.2% against its industry’s decline of 20.6%.
Other companies in the same space, such as MoneyGram International, Inc. , Houlihan Lokey, Inc. (HLI - Free Report) and PRA Group, Inc. (PRAA - Free Report) have also gained 223.3%, 40% and 8.4%, respectively, in the same time frame. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Unlike other companies, Virtu Financial has been gaining a sweet spot from the coronavirus-led market volatility so far. Being a high-frequency trader, the company took a hit from an uninterrupted financial market in recent years. However, the pandemic proved to be a boon as market volatility soared. The company managed to surpass on earnings thrice in the trailing four quarters (while meeting estimates in one), the average surprise being 13.3%.
Revenues of the company gained on the back of a heightened market disruption, bid-ask spreads, and trading volumes and asset classes. It recently expanded its multi-asset transaction cost model offering with the introduction of Fixed Income Agency Cost Estimator (FI ACE). The new tool will not only help clients take informed decisions about constructing their portfolios but also provide an insight into the transaction costs in the fixed income markets.
Further, the company’s diversified business strengthens its position for the long haul. It is witnessing steady growth in both its customer and non-customer market-making businesses.
In August, the company completed the sale of Match Now to CBOE Global Markets. MATCHNow, an alternative trading system, is the premier provider of dark liquidity to the Canadian equities market and the company expects to cater to a wider audience with this deal.
Its robust Market Making segment has been delivering solid results to date. The segment also witnessed organic growth in its non-customer Market Making business on the back of the recently-launched Marketing Making strategies in Europe, improvement in exchange-traded products block desk and better options capabilities. The Market Making segment also benefited from KCG Holdings Inc.’s quantitative market making strategies. Revenues from this business line skyrocketed 170.9% in the first nine months of 2020.
The company’s Execution Services Segment comprises agency-based trading and trading venues. The segment is consistently gaining from the ITG buyout, which diversified its revenues as well as leveraged its core technology. As of Sep 30, 2020, revenues from this segment grew 39.7% year over year on the back of commissions, workflow technology and analytics.
Virtu Financial's solvency level is a positive. Repayment of debt enabled the company to successfully reduce the same by 16.5% from 2019 end to $1.67 billion as of Sep 30, 2020. Its total debt is 47.5% of capital, lower than the industry’s average of 58.7%. Its times interest earned at third-quarter end stands at 8.9X, higher than the industry's average of 4.9X. Virtu Financial has plans to use its free cash flow to decrease its term debt. Thus, its financial flexibility is impressive.
Is Further Upside Left?
The company’s return on equity — a profitability measure — stands at 52.1%, higher than the industry average of 18.5%.
Given the existing market condition, we expect the company to continue gaining traction from solid segmental contributions and the COVID-led market unpredictability.
Its 2020 earnings estimate is pegged at $5.35, indicating a 457.29% surge from the year-ago reported figure.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>