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What's in Store for Virtu Financial's (VIRT) Q2 Earnings?

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Virtu Financial, Inc. (VIRT - Free Report) is slated to report second-quarter 2021 results on Aug 4, before market open.

Q2 Earnings and Revenue Estimates

The Zacks Consensus Estimate for the company’s earnings per share is pegged at 75 cents, indicating a 56.4% decrease from the year-ago quarter’s reported figure. The consensus mark for revenues stands at $360 million, suggesting a 46.2% decrease from the year-earlier quarter’s reported number.

Factors to Note

The company’s earnings are likely to have been affected by declining revenues due to poor performance by both its Marketing Making and Execution Services segments. The company gains from high market volatility. Thus, a weakened market volatility leads to an uninterrupted financial market wherein demand for liquidity is low, and trading and profit opportunities are less.

Market Making Segment engages in buying and selling securities, and other financial instruments. The segment is likely to witness poor results for the second quarter as the economy is rebounding.

The consensus mark for Total Market Making's adjusted net income of $253 million indicates a decline of 54.2% from the year-ago quarter's reported figure.

The Execution Services segment is also likely to have suffered due to lower workflow and commissions. The Zacks Consensus estimate for adjusted net income of $107 million from this segment implies an 8.5% decline from the year-earlier quarter’s reported number.

Adjusted net trading income from Global Equities is also expected to have fallen in the to-be reported quarter. The consensus mark for the same indicates a downfall of 51.5% from the year-ago quarter's reported figure.

Steep increase in operating expenses is also likely to have eroded margins. In the second quarter, the company might have faced an escalating expense level due to higher brokerage, exchange, clearance fees and payments for order flow, net, communication and data processing, employee compensation and payroll taxes, debt issue cost related to debt refinancing, prepayment and commitment fees among others.

Developments During the June Quarter

Virtu Financial inked a deal with the Pyth Network whereby the company is required to provide its financial market data across equities, FX, futures and cryptocurrencies for usage through smart contracts via the Solana blockchain and other major blockchains. The company is expected to change the way pricing market data is generally used on the bockchain.

Earnings Surprise History

The company has an impressive earnings surprise history. Its bottom line beat estimates in each of the trailing four quarters, the average being 30.04%. This is depicted in the chart below:

What Our Quantitative Model Predicts

Our proven model doesn’t predict an earnings surprise for Virtu Financial this time around. The combination of a positive Earnings ESP  and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.

Earnings ESP: Virtu Financial has an Earnings ESP of -6.22%. This is because the Most Accurate Estimate is pegged at 70 cents, lower than the Zacks Consensus Estimate of 75 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Virtu Financial, Inc. Price and EPS Surprise

Virtu Financial, Inc. Price and EPS Surprise

Virtu Financial, Inc. price-eps-surprise | Virtu Financial, Inc. Quote

 
Zacks Rank: Virtu Financial carries a Zacks Rank #3, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Some stocks worth considering from the finance sector with the apt combination of elements to surpass estimates this reporting cycle are as follows:

CME Group Inc. (CME - Free Report) has a Zacks Rank of 3 and an Earnings ESP of +0.19%.

Equitable Holdings, Inc. (EQH - Free Report) is currently Zacks #3 Ranked and has an Earnings ESP of +0.97%.

Assurant, Inc. (AIZ - Free Report) has a Zacks Rank of 3 and an Earnings ESP of +2.01%.