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Virtu Financial (VIRT)
NASDAQ:VIRT
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Virtu Financial
(NASDAQ:VIRT)71Outperform
Positive Factors
Earnings
Virtu Financial Inc's earnings per share for the fourth quarter are raised due to higher market making revenues.
Market Volatility
Realized volatility picked up during the quarter, which could be beneficial for VIRT.
Negative Factors
Operating Expenses
Higher market making revenues are partially offset by higher operating expenses for Virtu Financial Inc.
Virtu Financial (VIRT) vs. S&P 500 (SPY)
Market Cap
$5.56B
Dividend Yield2.67%
Average Volume (3M)1.04M
Price to Earnings (P/E)12.1
Beta (1Y)0.53
Revenue Growth24.22%
EPS Growth112.34%
CountryUS
Employees975
SectorFinancial
Sector Strength93
IndustryCapital Markets
Share Statistics
EPS (TTM)2.98
Shares Outstanding86,618,614
10 Day Avg. Volume1,193,741
30 Day Avg. Volume1,044,504
Financial Highlights & Ratios
PEG Ratio0.11
Price to Book (P/B)N/A
Price to Sales (P/S)2.68
Price to Cash Flow (P/CF)3.60
P/FCF Ratio3.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$38.43Price Target Upside5.96% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering8
Virtu Financial Business Overview & Revenue Model
Company DescriptionVirtu Financial, Inc. engages in the provision of market making and liquidity services through its proprietary, multi-asset, and multi-currency technology platform. It operates through the following segments: Market Making, Execution Services, and Corporate. The Market Making segment involves in the buy and sell of securities and other financial instruments. The Execution Services segment agency offers trading venues that provide transparent trading in global equities, ETFs, and fixed income to institutions, banks and broker dealers. The Corporate segment consists investments in strategic financial services-oriented opportunities and maintains corporate overhead expenses and all other income and expenses that are not attributable to the other segments. The company was founded by Vincent J. Viola in 2008 and is headquartered in New York, NY.
How the Company Makes MoneyVirtu Financial makes money primarily through market making and execution services. As a market maker, Virtu provides liquidity to the financial markets by continuously buying and selling securities, profiting from the bid-ask spread. The firm uses sophisticated algorithms to execute high-frequency trades, capturing small price discrepancies across different markets and asset classes. Additionally, Virtu earns revenue through commissions and fees from its execution services, where it acts as an intermediary for institutional clients, helping them execute large orders with minimal market impact. The company may also engage in proprietary trading, leveraging its technology and market insights to generate additional returns. Key partnerships with major financial institutions and exchanges further enhance its capabilities and access to liquidity, contributing to its earnings.
Virtu Financial Financial Statement Overview
Summary
Virtu Financial shows solid financial health with strong revenue growth and profitability, a significant reduction in debt levels, and effective equity usage. However, challenges include declining EBIT margins and negative free cash flow growth.Income Statement
Virtu Financial shows a solid financial performance in its income statement. The TTM data reveals a gross profit margin of 78.81%, demonstrating efficient management of production costs relative to revenue. The net profit margin stands at 10.83%, which is healthy for the industry. Revenue growth from 2023 to the TTM period is 11.27%, indicating positive momentum. However, there is a decline in EBIT margin from 42.19% in 2021 to 31.64% in TTM, which suggests some challenges in operating efficiency.75
Positive
Balance Sheet
The balance sheet of Virtu Financial indicates moderate leverage with a debt-to-equity ratio of 0.18 in the TTM period, a significant improvement from previous years, suggesting a reduced reliance on debt financing. The equity ratio is 9.69%, showing a relatively small portion of assets financed by equity, which might pose a risk if liabilities increase. Return on equity (ROE) is 18.58%, reflecting effective use of equity to generate profits.68
Positive
Cash Flow
Virtu Financial's cash flow analysis shows robust free cash flow generation with a TTM free cash flow to net income ratio of 0.68 and an operating cash flow to net income ratio of 0.75. However, the free cash flow growth rate from 2023 to TTM is negative at -58.35%, highlighting potential challenges in maintaining cash flow levels.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 2.88B | 2.29B | 2.01B | 2.58B | 2.94B | Gross Profit |
| 2.88B | 1.39B | 2.01B | 2.58B | 2.94B | EBIT |
| 644.97M | 967.72M | 567.85M | 1.03B | 1.35B | EBITDA |
| 2.53B | 1.05B | 699.06M | 1.17B | 1.49B | Net Income Common Stockholders |
| 276.42M | 142.04M | 265.03M | 476.88M | 649.20M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 872.51M | 820.44M | 981.58M | 1.07B | 889.56M | Total Assets |
| 15.36B | 14.47B | 10.58B | 10.32B | 9.97B | Total Debt |
| 268.37M | 1.73B | 1.80B | 1.61B | 1.64B | Net Debt |
| -604.15M | 906.77M | 814.37M | 533.67M | 749.72M | Total Liabilities |
| 13.87B | 13.06B | 1.80B | 1.61B | 1.64B | Stockholders Equity |
| 1.49B | 1.20B | 1.34B | 1.55B | 1.47B |
| Cash Flow | Free Cash Flow | |||
| 544.68M | 454.00M | 679.60M | 1.15B | 1.03B | Operating Cash Flow |
| 598.99M | 491.78M | 706.80M | 1.17B | 1.06B | Investing Cash Flow |
| -61.85M | -94.48M | -29.53M | -87.35M | -2.56M | Financing Cash Flow |
| -469.56M | -585.03M | -735.75M | -957.86M | -839.92M |
Virtu Financial Technical Analysis
Positive
36.27
Price Trends
36.85
Negative
35.48
Positive
31.00
Positive
Market Momentum
-0.43
Positive
47.17
Neutral
46.47
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VIRT, the sentiment is Positive. The current price of 36.27 is below the 20-day moving average (MA) of 36.90, below the 50-day MA of 36.85, and above the 200-day MA of 31.00, indicating a neutral trend. The MACD of -0.43 indicates Positive momentum. The RSI at 47.17 is Neutral, neither overbought nor oversold. The STOCH value of 46.47 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for VIRT.
Virtu Financial Risk Analysis
Virtu Financial disclosed 45 risk factors in its most recent earnings report. Virtu Financial reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Virtu Financial Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | $90.80B | 26.05 | 13.26% | 4.13% | 9.88% | 9.18% | |
81 Outperform | $82.84B | 28.30 | 19.20% | 0.51% | 19.54% | 22.23% | |
77 Outperform | $97.59B | 35.52 | 10.32% | 1.06% | 15.32% | 14.02% | |
75 Outperform | $45.30B | 40.84 | 10.15% | 1.19% | 21.96% | -8.37% | |
73 Outperform | $7.46B | 27.19 | 19.74% | 1.50% | 9.06% | 6.10% | |
71 Outperform | $5.56B | 12.11 | 21.20% | 2.67% | 24.22% | 112.34% | |
64 Neutral | $14.34B | 10.61 | 9.28% | 4.07% | 18.04% | -9.54% |
* Financial Sector Average
Performance Comparison
VIRT
Virtu Financial
36.27
17.75
95.84%
CME
CME Group
254.48
44.58
21.24%
IBKR
Interactive Brokers
196.69
87.40
79.97%
ICE
Intercontinental Exchange
171.61
33.88
24.60%
MKTX
Marketaxess Holdings
195.85
-9.17
-4.47%
NDAQ
Nasdaq
78.80
21.72
38.05%
Virtu Financial Earnings Call Summary
Earnings Call Date: Jan 29, 2025 | % Change Since: -6.21% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Positive
The earnings call highlighted Virtu Financial's strong performance in market-making and Execution Services, significant contributions from organic growth initiatives, and a robust share repurchase program. Despite some regulatory challenges and high interest expenses, the company's disciplined cost management and strategic investments position it well for future growth.Highlights
Strong Performance in Market-Making
Our market-making segment earned an average of $5.5 million per day of adjusted net trading income in the quarter, an increase of 23% over the previous quarter.
Execution Services Growth
Execution Services delivered $1.7 million per day, the best quarter since Q1 2022, with a 12% increase over the previous quarter.
Organic Growth Initiatives Success
Generated $787,000 per day from organic growth in 2024, the highest ANTI per day since reporting began, with crypto initiatives performing strongly despite market declines.
Share Repurchase Program
Repurchased 1.7 million shares in Q4 2024, totaling 51 million shares to date, demonstrating a commitment to returning capital to shareholders.
Adjusted EBITDA Margin
Realized a 58% adjusted EBITDA margin for 2024, reflecting disciplined cost management and operational efficiency.
Lowlights
Regulatory Challenges
Expressed concerns over previous regulatory environments impacting digital assets and potential overbearing administrative actions.
Interest Expenses
Recorded $27 million in financing interest expense for Q4 2024, with a blended interest rate of approximately 7.2% for long-term debt.
Company Guidance
During the Virtu Financial 2024 Fourth Quarter Results Conference Call, the company provided several key performance metrics and strategic initiatives. For the fourth quarter, Virtu achieved $7.27 million of adjusted net trading income per day, with an impressive normalized adjusted EPS of $1.14. The market-making segment earned an average of $5.5 million per day, while Execution Services delivered $1.7 million per day, marking increases of 23% and 12% per day, respectively. The firm also reported an adjusted EBITDA of $284 million, resulting in an adjusted EBITDA margin of 61.9%. Throughout 2024, Virtu's organic growth initiatives contributed $787,000 per day to adjusted net trading income, accounting for 12% of firm-wide ANTI. The company's share repurchase program led to the repurchase of 1.7 million shares in Q4 at an average price of $34.18 per share. Virtu remains committed to its $0.24 per quarter dividend, underscoring its dedication to returning capital to shareholders. The company continues to focus on expanding its product offerings and enhancing its technology capabilities to drive future growth.Virtu Financial Corporate Events
Executive/Board Changes
Virtu Financial Extends Executive Employment Agreements
Positive
Feb 28, 2025
On February 26, 2025, Virtu Financial Operating LLC, a subsidiary of Virtu Financial, Inc., amended the employment agreements of two key executives, Joseph Molluso and Stephen Cavoli, extending their terms to February 28, 2028. This move ensures continuity in leadership, potentially strengthening the company’s market position and operational stability.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.