It has been about a month since the last earnings report for Virtu Financial (VIRT Quick QuoteVIRT - Free Report) . Shares have lost about 0.8% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Virtu Financial due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Virtu Financial's Q3 Earnings Beat Estimates, Fall Y/Y

Virtu Financial’s third-quarter 2021 earnings per share of 70 cents beat the Zacks Consensus Estimate by 14.8% owing to lower expenses. However, the bottom line decreased 13.6% year over year.

Operating revenues of $354 million declined 2.2% year over year due to weak trading volume in U.S. equities. The top line, however, beat the consensus mark by 8.9%.

Quarterly Operational Update

In the quarter under review, adjusted EBITDA dropped 15.3% to o $210.7  million.

Total operating expenses dipped 1.1% year over year to $399 million.This is driven by decline in brokerage, exchange, clearance fees and payments for order flow, operations and administrative costs, amortization of purchased intangibles and acquired capitalized software, transaction advisory fees and expenses, Debt issue cost related to debt refinancing, and prepayment and
commitment fees.

Segmental Update

Net trading income from the Market Making segment was down 11.9% year over year to $389.4 million in the quarter under review.

Adjusted net trading income from Execution Services came in at $4.8 million against the year-ago quarter’s negative $0.53 million.

Dividend and Share Repurchase Update

The company's board of directors declared a quarterly cash dividend of 24 cents per share to be paid out on Dec 15, 2021 to its shareholders of record as of Dec 1.

It bought back shares worth $138.9 million under the share repurchase program.

Virtu Financial now has $858.6 million left under its share buyback authorization for future purchases of shares of Class A Common Stock and Virtu Financial Units.

Financial Update (as of Sep 30, 2021)

The company had total assets worth $10.4 billion, up 4.7% from the level at 2020 end.

It exited the September quarter with total equity of $1.8 billion, down 2.9% from the level on Dec 31, 2020.

The company exited the third quarter with $683.8 million of cash and cash equivalents, down 23.1% from the 2020-end level

In the quarter under review, long-term borrowings slipped 2.1% to $1.6 billion from the level at 2020 end.

 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 5.28% due to these changes.

VGM Scores

At this time, Virtu Financial has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Virtu Financial has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.