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Virtu Financial Rides on Execution Services, Cost-Controlling Efforts
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Virtu Financial, Inc. (VIRT - Free Report) is well-poised for growth on the back of solid Execution Services segment, balance sheet strength and declining costs. Higher revenues from commissions, net and technology services are boosting its performance. Its proprietary technology enables high-frequency trading and liquidity provision on numerous exchanges and markets around the globe.
Let’s delve deeper.
VIRT’s Robust Execution Services
The Execution Services segment has been gaining from the ITG buyout, which diversified its revenues and leveraged its core technology. Expanding operations in Europe and Asia are further helping its diversification efforts. Its extensive reach and technological edge are major tailwinds. Total revenues from the segment jumped 13.6% year over year to $507.2 million.
VIRT’s Strong Balance Sheet
Virtu Financial exited the fourth quarter with cash and cash equivalents of $872.5 million, which rose from the 2023-end level of $820.4 million. The figure is much higher than its short-term borrowings of $38.5 million. At fourth-quarter end, its total debt to capital of 53.9% was lower than the industry average of 54.9%.
VIRT’s Efficiency Boost
The company’s cost controlling efforts are paying off, boosting profitability. Its brokerage, exchange, clearance fees and payments for order flow has come down to $674.4 million in 2024 from 2020 level of $758.8 million, despite increasing trading volume. Over the past five years, its operations and administrative expenses declined four times. Management also does not shy away from shedding non-core operations to increase efficiency.
VIRT’s Earnings Surprise History
Virtu Financial boasts a solid earnings surprise record. Its earnings have outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 25.1%.
Other Stocks Boosting Market Presence
Apart from VIRT, other financial services stocks such as Interactive Brokers Group, Inc. (IBKR - Free Report) and Tradeweb Markets Inc. (TW - Free Report) are undertaking expansion plans for bolstering their market presence.
In November 2024, Interactive Brokers launched Plan d’Epargne en Actions accounts to boost its offerings for its French clients. Also, the launch of IBKR GlobalTrader has enabled investors worldwide to trade stocks through mobile applications. It continues to explore growth opportunities in the emerging markets of Taiwan, Mexico and India. In the last reported quarter, its adjusted earnings per share of $2.03 beat the Zacks Consensus Estimate of $1.86.
Based in New York, Tradeweb operates electronic marketplaces worldwide and serves more than 3,000 clients in more than 85 countries. Last month it partnered with Coremont to integrate its global fixed income execution workflows into Coremont’s Clarion platform. The company is expanding its presence in emerging markets with EM revenues now run-rating at more than $60 million annually. TW’s earnings per share of 76 cents, in the last reported quarter, beat the consensus mark by 2.7%.
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Virtu Financial Rides on Execution Services, Cost-Controlling Efforts
Virtu Financial, Inc. (VIRT - Free Report) is well-poised for growth on the back of solid Execution Services segment, balance sheet strength and declining costs. Higher revenues from commissions, net and technology services are boosting its performance. Its proprietary technology enables high-frequency trading and liquidity provision on numerous exchanges and markets around the globe.
Let’s delve deeper.
VIRT’s Robust Execution Services
The Execution Services segment has been gaining from the ITG buyout, which diversified its revenues and leveraged its core technology. Expanding operations in Europe and Asia are further helping its diversification efforts. Its extensive reach and technological edge are major tailwinds. Total revenues from the segment jumped 13.6% year over year to $507.2 million.
VIRT’s Strong Balance Sheet
Virtu Financial exited the fourth quarter with cash and cash equivalents of $872.5 million, which rose from the 2023-end level of $820.4 million. The figure is much higher than its short-term borrowings of $38.5 million. At fourth-quarter end, its total debt to capital of 53.9% was lower than the industry average of 54.9%.
VIRT’s Efficiency Boost
The company’s cost controlling efforts are paying off, boosting profitability. Its brokerage, exchange, clearance fees and payments for order flow has come down to $674.4 million in 2024 from 2020 level of $758.8 million, despite increasing trading volume. Over the past five years, its operations and administrative expenses declined four times. Management also does not shy away from shedding non-core operations to increase efficiency.
VIRT’s Earnings Surprise History
Virtu Financial boasts a solid earnings surprise record. Its earnings have outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 25.1%.
Other Stocks Boosting Market Presence
Apart from VIRT, other financial services stocks such as Interactive Brokers Group, Inc. (IBKR - Free Report) and Tradeweb Markets Inc. (TW - Free Report) are undertaking expansion plans for bolstering their market presence.
In November 2024, Interactive Brokers launched Plan d’Epargne en Actions accounts to boost its offerings for its French clients. Also, the launch of IBKR GlobalTrader has enabled investors worldwide to trade stocks through mobile applications. It continues to explore growth opportunities in the emerging markets of Taiwan, Mexico and India. In the last reported quarter, its adjusted earnings per share of $2.03 beat the Zacks Consensus Estimate of $1.86.
Based in New York, Tradeweb operates electronic marketplaces worldwide and serves more than 3,000 clients in more than 85 countries. Last month it partnered with Coremont to integrate its global fixed income execution workflows into Coremont’s Clarion platform. The company is expanding its presence in emerging markets with EM revenues now run-rating at more than $60 million annually. TW’s earnings per share of 76 cents, in the last reported quarter, beat the consensus mark by 2.7%.