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Can a Soft Market Making Unit Hurt Virtu's (VIRT) Q1 Earnings?
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Virtu Financial, Inc. (VIRT - Free Report) is slated to release first-quarter 2024 results on Apr 24, before the opening bell.
Q1 Estimates
The Zacks Consensus Estimate for VIRT’s first-quarter earnings per share is pegged at 56 cents, which indicates a 24.3% decline from the year-ago quarter’s reported figure.
The consensus mark for revenues is $326 million, suggesting a 12.6% fall from the year-ago quarter’s tally.
Earnings Surprise History
Virtu Financial’s earnings beat estimates in two of the trailing four quarters and missed the mark twice, the average negative surprise being 1.85%. This is depicted in the chart below:
The top line of Virtu Financial is expected to have gained on the back of an increase in interest and dividends income in the first quarter. The Zacks Consensus Estimate for interest and dividends income is pegged at $165.6 million, which has more than doubled from the year-ago quarter’s reported figure and matches our estimate.
However, softness in net trading income and lower revenues derived from commissions and technology services are likely to have dampened the quarterly results of VIRT in the to-be-reported quarter.
The consensus estimate for net trading income is $343 million, suggesting a 16.7% fall from the year-ago quarter’s reported number. The consensus mark for commissions, net and technology services is pegged at $116.3 million, which indicates a decline of 4.3% from the year-ago quarter’s reported figure. Our estimate for the two revenue components implies a fall of 16.7% and 4.3%, respectively, from their corresponding year-ago quarter’s reported number.
The Market Making and Execution Services segments are expected to have suffered a blow due to a decline in average adjusted net trading income per day in the first quarter. The Zacks Consensus Estimate for adjusted net trading income in the Market Making unit is pegged at $231.3 million, suggesting a 16.7% decline from the year-ago quarter’s reported figure. The consensus mark for the same for the Execution Services segment is $94.8 million, which indicates a 0.5% dip from the year-ago quarter’s number.
The bottom line of Virtu Financial is likely to have taken a hit due to an elevated expense level resulting from increased costs related to communication and data processing, interest and dividends expenses as well as operations and administrative costs.
Our estimate for total operating expenses is $548.5 million in the first quarter, which indicates an increase of 12.9% year over year. Additionally, we expect communication and data processing costs, interest and dividends expense, and operations and administrative costs to escalate 7.9%, 86.1% and 5.3%, respectively, on a year-over-year basis.
What our Quantitative Model Predicts
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 odds of an earnings beat. However, that’s not the case here, as you see below.
Earnings ESP: Virtu Financial has an Earnings ESP of -2.23% because the Most Accurate Estimate of 55 cents per share is pegged lower than the Zacks Consensus Estimate of 56 cents. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: VIRT currently carries a Zacks Rank of 3.
Stocks to Consider
Here are some companies from the Finance space, which according to our model, have the right combination of elements to beat on earnings this time around:
The Zacks Consensus Estimate for TROW’s first-quarter 2024 earnings is pegged at $1.99 per share, indicating an improvement of 17.8% from the year-ago quarter’s reported number.
T. Rowe Price’s earnings beat estimates in each of the trailing four quarters, the average surprise being 13.31%.
AllianceBernstein Holding L.P. (AB - Free Report) has an Earnings ESP of +2.14% and a Zacks Rank of 2, at present. The Zacks Consensus Estimate for AB’s first-quarter 2024 earnings is pegged at 70 cents per share, which implies a 6.1% rise from the year-ago quarter’s reported figure.
AllianceBernstein’s earnings beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 5.58%.
Essex Property Trust, Inc. (ESS - Free Report) has an Earnings ESP of +0.18% and a Zacks Rank of 3, at present. The Zacks Consensus Estimate for ESS’ first-quarter 2024 earnings is pegged at $3.74 per share, which indicates an improvement of 2.5% from the year-ago quarter’s reported figure.
Essex Property’s earnings beat estimates in each of the trailing four quarters, the average surprise being 0.67%.
Image: Bigstock
Can a Soft Market Making Unit Hurt Virtu's (VIRT) Q1 Earnings?
Virtu Financial, Inc. (VIRT - Free Report) is slated to release first-quarter 2024 results on Apr 24, before the opening bell.
Q1 Estimates
The Zacks Consensus Estimate for VIRT’s first-quarter earnings per share is pegged at 56 cents, which indicates a 24.3% decline from the year-ago quarter’s reported figure.
The consensus mark for revenues is $326 million, suggesting a 12.6% fall from the year-ago quarter’s tally.
Earnings Surprise History
Virtu Financial’s earnings beat estimates in two of the trailing four quarters and missed the mark twice, the average negative surprise being 1.85%. This is depicted in the chart below:
Virtu Financial, Inc. Price and EPS Surprise
Virtu Financial, Inc. price-eps-surprise | Virtu Financial, Inc. Quote
Factors to Note
The top line of Virtu Financial is expected to have gained on the back of an increase in interest and dividends income in the first quarter. The Zacks Consensus Estimate for interest and dividends income is pegged at $165.6 million, which has more than doubled from the year-ago quarter’s reported figure and matches our estimate.
However, softness in net trading income and lower revenues derived from commissions and technology services are likely to have dampened the quarterly results of VIRT in the to-be-reported quarter.
The consensus estimate for net trading income is $343 million, suggesting a 16.7% fall from the year-ago quarter’s reported number. The consensus mark for commissions, net and technology services is pegged at $116.3 million, which indicates a decline of 4.3% from the year-ago quarter’s reported figure. Our estimate for the two revenue components implies a fall of 16.7% and 4.3%, respectively, from their corresponding year-ago quarter’s reported number.
The Market Making and Execution Services segments are expected to have suffered a blow due to a decline in average adjusted net trading income per day in the first quarter. The Zacks Consensus Estimate for adjusted net trading income in the Market Making unit is pegged at $231.3 million, suggesting a 16.7% decline from the year-ago quarter’s reported figure. The consensus mark for the same for the Execution Services segment is $94.8 million, which indicates a 0.5% dip from the year-ago quarter’s number.
The bottom line of Virtu Financial is likely to have taken a hit due to an elevated expense level resulting from increased costs related to communication and data processing, interest and dividends expenses as well as operations and administrative costs.
Our estimate for total operating expenses is $548.5 million in the first quarter, which indicates an increase of 12.9% year over year. Additionally, we expect communication and data processing costs, interest and dividends expense, and operations and administrative costs to escalate 7.9%, 86.1% and 5.3%, respectively, on a year-over-year basis.
What our Quantitative Model Predicts
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 odds of an earnings beat. However, that’s not the case here, as you see below.
Earnings ESP: Virtu Financial has an Earnings ESP of -2.23% because the Most Accurate Estimate of 55 cents per share is pegged lower than the Zacks Consensus Estimate of 56 cents. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: VIRT currently carries a Zacks Rank of 3.
Stocks to Consider
Here are some companies from the Finance space, which according to our model, have the right combination of elements to beat on earnings this time around:
T. Rowe Price Group, Inc. (TROW - Free Report) currently has an Earnings ESP of +0.59% 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 TROW’s first-quarter 2024 earnings is pegged at $1.99 per share, indicating an improvement of 17.8% from the year-ago quarter’s reported number.
T. Rowe Price’s earnings beat estimates in each of the trailing four quarters, the average surprise being 13.31%.
AllianceBernstein Holding L.P. (AB - Free Report) has an Earnings ESP of +2.14% and a Zacks Rank of 2, at present. The Zacks Consensus Estimate for AB’s first-quarter 2024 earnings is pegged at 70 cents per share, which implies a 6.1% rise from the year-ago quarter’s reported figure.
AllianceBernstein’s earnings beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 5.58%.
Essex Property Trust, Inc. (ESS - Free Report) has an Earnings ESP of +0.18% and a Zacks Rank of 3, at present. The Zacks Consensus Estimate for ESS’ first-quarter 2024 earnings is pegged at $3.74 per share, which indicates an improvement of 2.5% from the year-ago quarter’s reported figure.
Essex Property’s earnings beat estimates in each of the trailing four quarters, the average surprise being 0.67%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.