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Can Higher Costs Affect Virtu Financial's (VIRT) Q4 Earnings?
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Virtu Financial, Inc. (VIRT - Free Report) is set to report its fourth-quarter 2023 results on Jan 25, before the opening bell.
What Do the Estimates Say?
The Zacks Consensus Estimate for fourth-quarter earnings per share of 45 cents suggests a 21.6% increase from the prior-year figure of 37 cents. The consensus mark remained stable over the past week. The consensus estimate for fourth-quarter revenues of $279.2 million indicates a 1.9% rise from the year-ago reported figure.
Virtu Financial beat the consensus estimate for earnings in two of the trailing four quarters and missed twice, with the average surprise being negative 0.5%. This is depicted in the graph below:
Before we get into what to expect for the to-be-reported quarter in detail, it’s worth taking a look at VIRT’s previous-quarter performance first.
Q3 Earnings Rewind
In the last reported quarter, the leading financial services and products provider reported adjusted earnings per share of 45 cents, beating the Zacks Consensus Estimate by 12.5%, thanks to surging interest and dividends income. The positives were partially offset by rising operating expenses and lower Market Making adjusted net trading income.
Virtu Financial is expected to have witnessed higher trading income in the quarter under review from both its operating segments due to various reasons, including increased interest and dividend income.
The Zacks Consensus Estimate for fourth-quarter adjusted net trading income from the Market Making segment indicates an 8.5% year-over-year increase, whereas our estimate suggests 8.3% growth. The consensus mark for the same for the Execution Services segment indicates a 0.1% increase from a year ago, while our estimate suggests a 0.5% gain.
Higher average adjusted net trading income per day, especially in the Market Making segment is expected to have boosted the results in the fourth quarter. Moreover, both the Zacks Consensus Estimate and our estimate for interest and dividends income for the fourth quarter are pegged at $122.5 million, signaling a 92.4% year-over-year jump, thanks to higher contributions from both segments.
The factors stated above are likely to have positioned the company for a year-over-year increase in the profit levels for the quarter under review. However, higher expenses are expected to have reduced margins in the fourth quarter. Our estimate for total operating expenses currently stands at $481.2 million, suggesting a more than 5% increase from the prior-year level, making an earnings beat uncertain.
Higher communication and data processing, employee compensation and payroll taxes, interest and dividends expenses are expected to have boosted the total costs in the quarter, partially offset by lower net brokerage, exchange and clearance fees and payments for order flow expenses.
Moreover, both the Zacks Consensus Estimate and our estimate for fourth-quarter commissions, net and technology services suggest a 2% decline from a year ago.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat 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 chances of an earnings beat. That is not the case here, as you will see below.
Earnings ESP: The company has an Earnings ESP of -9.36%. This is because the Most Accurate Estimate currently stands at 40 cents per share, lower than the Zacks Consensus Estimate of 45 cents.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Virtu Financial currently carries a Zacks Rank #3.
Stocks to Consider
While an earnings beat looks uncertain for Virtu Financial, here are some companies from the broader Finance space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
The Zacks Consensus Estimate for Coinbase’s bottom line for the to-be-reported quarter suggests a 95.1% year-over-year improvement. The estimate improved by 7 cents over the past month. COIN beat earnings estimates in three of the past four quarters and missed once, with an average surprise of 63%.
Chubb Limited (CB - Free Report) has an Earnings ESP of +0.60% and is a Zacks #3 Ranked player.
The Zacks Consensus Estimate for Chubb’s bottom line for the to-be-reported quarter indicates a 24.4% year-over-year increase. The estimate increased by 4 cents over the past week. Furthermore, the consensus mark for CB’s revenues is pegged at $12.9 billion, suggesting 10.2% growth from a year ago.
Brookfield Asset Management Ltd. (BAM - Free Report) has an Earnings ESP of +0.69% and a Zacks Rank of 3.
The Zacks Consensus Estimate for Brookfield Asset Management’s bottom line for the to-be-reported quarter indicates 9.7% growth from the year-ago period. BAM beat earnings estimates twice in the past four quarters and missed on the other two occasions, with an average surprise of 0.2%.
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Can Higher Costs Affect Virtu Financial's (VIRT) Q4 Earnings?
Virtu Financial, Inc. (VIRT - Free Report) is set to report its fourth-quarter 2023 results on Jan 25, before the opening bell.
What Do the Estimates Say?
The Zacks Consensus Estimate for fourth-quarter earnings per share of 45 cents suggests a 21.6% increase from the prior-year figure of 37 cents. The consensus mark remained stable over the past week. The consensus estimate for fourth-quarter revenues of $279.2 million indicates a 1.9% rise from the year-ago reported figure.
Virtu Financial beat the consensus estimate for earnings in two of the trailing four quarters and missed twice, with the average surprise being negative 0.5%. This is depicted in the graph below:
Virtu Financial, Inc. Price and EPS Surprise
Virtu Financial, Inc. price-eps-surprise | Virtu Financial, Inc. Quote
Before we get into what to expect for the to-be-reported quarter in detail, it’s worth taking a look at VIRT’s previous-quarter performance first.
Q3 Earnings Rewind
In the last reported quarter, the leading financial services and products provider reported adjusted earnings per share of 45 cents, beating the Zacks Consensus Estimate by 12.5%, thanks to surging interest and dividends income. The positives were partially offset by rising operating expenses and lower Market Making adjusted net trading income.
Now, let’s see how things have shaped up before the fourth-quarter earnings announcement.
Q4 Factors to Note
Virtu Financial is expected to have witnessed higher trading income in the quarter under review from both its operating segments due to various reasons, including increased interest and dividend income.
The Zacks Consensus Estimate for fourth-quarter adjusted net trading income from the Market Making segment indicates an 8.5% year-over-year increase, whereas our estimate suggests 8.3% growth. The consensus mark for the same for the Execution Services segment indicates a 0.1% increase from a year ago, while our estimate suggests a 0.5% gain.
Higher average adjusted net trading income per day, especially in the Market Making segment is expected to have boosted the results in the fourth quarter. Moreover, both the Zacks Consensus Estimate and our estimate for interest and dividends income for the fourth quarter are pegged at $122.5 million, signaling a 92.4% year-over-year jump, thanks to higher contributions from both segments.
The factors stated above are likely to have positioned the company for a year-over-year increase in the profit levels for the quarter under review. However, higher expenses are expected to have reduced margins in the fourth quarter. Our estimate for total operating expenses currently stands at $481.2 million, suggesting a more than 5% increase from the prior-year level, making an earnings beat uncertain.
Higher communication and data processing, employee compensation and payroll taxes, interest and dividends expenses are expected to have boosted the total costs in the quarter, partially offset by lower net brokerage, exchange and clearance fees and payments for order flow expenses.
Moreover, both the Zacks Consensus Estimate and our estimate for fourth-quarter commissions, net and technology services suggest a 2% decline from a year ago.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat 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 chances of an earnings beat. That is not the case here, as you will see below.
Earnings ESP: The company has an Earnings ESP of -9.36%. This is because the Most Accurate Estimate currently stands at 40 cents per share, lower than the Zacks Consensus Estimate of 45 cents.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Virtu Financial currently carries a Zacks Rank #3.
Stocks to Consider
While an earnings beat looks uncertain for Virtu Financial, here are some companies from the broader Finance space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
Coinbase Global, Inc. (COIN - Free Report) has an Earnings ESP of +160.61% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Coinbase’s bottom line for the to-be-reported quarter suggests a 95.1% year-over-year improvement. The estimate improved by 7 cents over the past month. COIN beat earnings estimates in three of the past four quarters and missed once, with an average surprise of 63%.
Chubb Limited (CB - Free Report) has an Earnings ESP of +0.60% and is a Zacks #3 Ranked player.
The Zacks Consensus Estimate for Chubb’s bottom line for the to-be-reported quarter indicates a 24.4% year-over-year increase. The estimate increased by 4 cents over the past week. Furthermore, the consensus mark for CB’s revenues is pegged at $12.9 billion, suggesting 10.2% growth from a year ago.
Brookfield Asset Management Ltd. (BAM - Free Report) has an Earnings ESP of +0.69% and a Zacks Rank of 3.
The Zacks Consensus Estimate for Brookfield Asset Management’s bottom line for the to-be-reported quarter indicates 9.7% growth from the year-ago period. BAM beat earnings estimates twice in the past four quarters and missed on the other two occasions, with an average surprise of 0.2%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.