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Why Is Virtu Financial (VIRT) Up 0.8% Since Last Earnings Report?
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It has been about a month since the last earnings report for Virtu Financial (VIRT - Free Report) . Shares have added about 0.8% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Virtu Financial due for a pullback? 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 Q1 Earnings Beat on Interest Income
Virtu Financial reported first-quarter 2024 adjusted earnings per share (EPS) of 76 cents, which outpaced the Zacks Consensus Estimate by 28.8%. The bottom line advanced 2.7% year over year.
Total revenues improved 3.6% year over year to $642.8 million in the quarter under review.
The quarterly results benefited on the back of substantial growth in interest and dividends income coupled with strong revenue contribution from the Market Making segment. However, the upside was partly offset by a decline in net trading income and an elevated overall expense level.
Q1 Performance Details
Adjusted net trading income slid 1.7% year over year to $366.9 million, which beat the Zacks Consensus Estimate of $335 million and our estimate of $320.9 million.
Revenues from commissions, net and technology services amounted to $118.6 million, which slipped 2.3% year over year in the first quarter. Yet, the metric beat the consensus mark and our estimate of $116 million. Interest and dividends income of $106 million climbed 28.9% year over year but fell short of the consensus mark and our estimate of $166 million.
Adjusted EBITDA declined 2.2% year over year to $202.8 million in the quarter under review but surpassed our estimate of $156.4 million. Adjusted EBITDA margin of 55.3% deteriorated 30 basis points year over year.
Total operating expenses increased 3.6% year over year to $503 million but was lower than our estimate of $548.5 million. The year-over-year rise was due to higher communication and data processing, interest and dividend expenses, and transaction advisory fees and expenses.
Segmental Update
Market Making: Adjusted net trading income was $273.7 million in the first quarter, down 1.5% year over year, and surpassing our estimate of $228.5 million. The segment’s revenues rose 4.4% year over year to $521 million, higher than the Zacks Consensus Estimate and our estimate of $511 million.
Execution Services: The unit recorded an adjusted net trading income of $93.2 million in the quarter under review, which fell 2.1% year over year. Yet, the metric beat our estimate of $92.4 million. Total revenues of $117.8 million dipped 0.6% year over year but surpassed the consensus mark and our estimate of $116 million.
Financial Update (as of Mar 31, 2024)
Virtu Financial exited the first quarter with cash and cash equivalents of $399.6 million, which plunged 51.3% from the 2023-end level. Total assets of $12.8 billion decreased 11.6% from the figure at 2023 end.
Long-term borrowings, net, amounted to $1.7 billion, down marginally from the 2023-end level. Short-term borrowings totaled $138.2 million.
Total equity of $1.4 billion inched up 1.3% from the level at 2023 end.
Share Repurchase and Dividend Update
As part of the Share Repurchase Program, Virtu Financial bought back 2 million shares worth $35.8 million in the first quarter of 2024. Management approved an increase of $500 million in its share repurchase authorization over the next two years. It had a leftover capacity of $568.6 million under its buyback authorization for future purchases.
VIRT announced a cash dividend of 24 cents per share. The dividend will be paid out on Jun 15, 2024, to shareholders of record as of Jun 1, 2024.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 17.21% due to these changes.
VGM Scores
Currently, Virtu Financial has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Virtu Financial has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Why Is Virtu Financial (VIRT) Up 0.8% Since Last Earnings Report?
It has been about a month since the last earnings report for Virtu Financial (VIRT - Free Report) . Shares have added about 0.8% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Virtu Financial due for a pullback? 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 Q1 Earnings Beat on Interest Income
Virtu Financial reported first-quarter 2024 adjusted earnings per share (EPS) of 76 cents, which outpaced the Zacks Consensus Estimate by 28.8%. The bottom line advanced 2.7% year over year.
Total revenues improved 3.6% year over year to $642.8 million in the quarter under review.
The quarterly results benefited on the back of substantial growth in interest and dividends income coupled with strong revenue contribution from the Market Making segment. However, the upside was partly offset by a decline in net trading income and an elevated overall expense level.
Q1 Performance Details
Adjusted net trading income slid 1.7% year over year to $366.9 million, which beat the Zacks Consensus Estimate of $335 million and our estimate of $320.9 million.
Revenues from commissions, net and technology services amounted to $118.6 million, which slipped 2.3% year over year in the first quarter. Yet, the metric beat the consensus mark and our estimate of $116 million. Interest and dividends income of $106 million climbed 28.9% year over year but fell short of the consensus mark and our estimate of $166 million.
Adjusted EBITDA declined 2.2% year over year to $202.8 million in the quarter under review but surpassed our estimate of $156.4 million. Adjusted EBITDA margin of 55.3% deteriorated 30 basis points year over year.
Total operating expenses increased 3.6% year over year to $503 million but was lower than our estimate of $548.5 million. The year-over-year rise was due to higher communication and data processing, interest and dividend expenses, and transaction advisory fees and expenses.
Segmental Update
Market Making: Adjusted net trading income was $273.7 million in the first quarter, down 1.5% year over year, and surpassing our estimate of $228.5 million. The segment’s revenues rose 4.4% year over year to $521 million, higher than the Zacks Consensus Estimate and our estimate of $511 million.
Execution Services: The unit recorded an adjusted net trading income of $93.2 million in the quarter under review, which fell 2.1% year over year. Yet, the metric beat our estimate of $92.4 million. Total revenues of $117.8 million dipped 0.6% year over year but surpassed the consensus mark and our estimate of $116 million.
Financial Update (as of Mar 31, 2024)
Virtu Financial exited the first quarter with cash and cash equivalents of $399.6 million, which plunged 51.3% from the 2023-end level. Total assets of $12.8 billion decreased 11.6% from the figure at 2023 end.
Long-term borrowings, net, amounted to $1.7 billion, down marginally from the 2023-end level. Short-term borrowings totaled $138.2 million.
Total equity of $1.4 billion inched up 1.3% from the level at 2023 end.
Share Repurchase and Dividend Update
As part of the Share Repurchase Program, Virtu Financial bought back 2 million shares worth $35.8 million in the first quarter of 2024. Management approved an increase of $500 million in its share repurchase authorization over the next two years. It had a leftover capacity of $568.6 million under its buyback authorization for future purchases.
VIRT announced a cash dividend of 24 cents per share. The dividend will be paid out on Jun 15, 2024, to shareholders of record as of Jun 1, 2024.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 17.21% due to these changes.
VGM Scores
Currently, Virtu Financial has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Virtu Financial has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.