Virtu Financial, Inc.’s (VIRT Quick QuoteVIRT - Free Report) shares have jumped 12.1% in the past three months, outperforming the 0.1% increase of the industry, thanks to strong segmental performances and operational excellence. The company has been gaining from market volatility and has positioned itself for better returns for the future.

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Headquartered in New York, Virtu Financial is a market-leading financial services firm that utilizes advanced technologies to provide execution services and data, analytics, and connectivity products to customers. It also delivers liquidity to the global markets. VIRT currently has a market cap of $5.2 billion. Strategic acquisitions will smoothen its trading income.

Can It Retain Momentum?

The answer is yes and before we get into the details, let us show you how its estimates for full-year 2021 stand. The Zacks Consensus Estimate for 2021 earnings per share stands at $4.08, which has been stable over the past few weeks. The consensus estimate for 2021 revenues is pegged at $1.8 billion.

The company beat earnings estimates in three of the last four quarters and missed once, with an average of 25.3%.

Now let’s delve into what’s driving the Zacks Rank #3 (Hold) stock.

VIRT’s Execution Services business has been gaining from the ITG buyout, which diversified its revenues and leveraged its core technology. VIRT helps brokers and asset managers to reduce the cost of implementing investments via technology-enabled liquidity, execution, analytics, and workflow solutions. Even though revenues have declined from this unit in the past few months, it is expected to bounce back soon, given the current market scenario. In addition, this miscellaneous financial service provider’s diversified business strengthens its position for the long haul.

Owing to financial strength, the company has been deploying capital in the form of dividends for 23 straight quarters. The board members sanctioned an additional share buyback authorization of $750 million over the next two years. It has even extended the duration of the same through May 4, 2022. VIRT’s dividend yield stands at 3.7%, higher than the industry average of 1.7%.

Virtu Financial's balance sheet position also remains impressive. It has already paid debt worth $289 million in 2020. This enabled the company to successfully reduce debt by 16.5% from 2019-end to $1.67 billion as of Dec 31, 2020. For the first nine months of 2021, long-term debt dipped 2.1% from the 2020-end level. Virtu Financial has plans to use free cash flow to decrease the term debt.

The company had been facing steep expenses over the last few quarters due to higher brokerage, exchange, clearance fees, payments and others. To counter the same, VIRT has undertaken a low-cost structure, which will improve profits. Thanks to the initiative, its expenses decreased 7.2% for the first nine months of 2021.

Risks

Despite the upside potential, there are a few factors that are impeding the stock’s growth lately. Virtu Financial’s performance is suffering from low market volumes. The decline in market volatility leads to an uninterrupted financial market, thereby resulting in reduced demand for liquidity and lesser trading and profit opportunities for Virtu Financial. Nevertheless, we believe that a systematic and strategic plan of action will drive long-term growth.

Stocks to Consider

Some better-ranked players in the Finance space include Houlihan Lokey, Inc. (HLI Quick QuoteHLI - Free Report) , Ryan Specialty Group Holdings, Inc. (RYAN Quick QuoteRYAN - Free Report) , and Brown & Brown, Inc. (BRO Quick QuoteBRO - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Houlihan Lokey — headquartered in Los Angeles, CA — provides multiple financial services to clients all over the world. Its growing footprint in Europe and Asia’s investment banking services field will help HLI boost strategic and shareholder value in the coming days. Rising average transaction fees will help HLI increase corporate finance revenues. The bottom line of Houlihan Lokey for the current year is expected to rise 37.7% year over year to $6.36 per share. In the past 30 days, it has witnessed one upward estimate revision and no downward movement. HLI beat earnings estimates in all the last four quarters, with an average of 39.5%.

Based in Chicago, IL, Ryan Specialty provides numerous specialty products and solutions for insurance brokers, agents, and others. It acts as a wholesale broker and managing underwriter to provide risk management services. Ryan Specialty’s bottom line for the next year is expected to jump 12.6% year over year to $1.21 per share. RYAN has witnessed two upward estimate revisions in the past 60 days and no movement in the opposite direction.

Headquartered in Daytona Beach, FL, Brown & Brown boasts impressive growth potential driven by organic means and a prudent inorganic story. Its strategic efforts continue to drive commission and fees, and sturdy performance is boosting cash flows. Brown & Brown’s 2022 earnings per share are expected to rise 5.1% year over year to $2.27. It has witnessed one upward estimate revision in the past 30 days versus none in the opposite direction. BRO beat earnings estimates in each of the last four quarters, with an average of 18.3%.