Virtu Financial, Inc. VIRT, a leading financial services company, is well-poised to grow on the back of its diversified business and rising interest and dividends income. High volatility favors the company’s Market Making segment. Headquartered in New York, Virtu Financial has a market cap of $5.1 billion.

Strong revenue contribution from the Market Making segment due to higher trading income will likely benefit the stock. We expect its capture rate from the unit to improve in the coming days, along with a decline in costs. Courtesy of solid prospects, this Zacks Rank #2 (Buy) stock is worth adding to your portfolio at the moment.

VIRT’s Price Performance

A glimpse at the company’s price trend reveals that the stock has had an impressive run in the past three months. Shares of Virtu Financial have surged 44.8% in the past three months, outperforming the industry, sector and the S&P 500 Index’s 8.6%, 1.1% and 1.4% growth, respectively.

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VIRT Key Tailwinds

The retail momentum is likely to continue, benefiting the stock. More volatility in the future, its growth initiatives, like expanding into options, cryptocurrency, ETF block trading, IPO investing and others, position it well for long-term growth. The company expects to support upcoming Ethereum ETFs as a market maker, highlighting opportunities in this sector.

The expansion of its Execution Services business, driven by advancements in technology and integration of new solutions, poises the company’s top line well for growth in the future, despite fluctuations in market volatility.

We expect its net brokerage, exchange, clearance fees and payments for order flow to continue on its declining path, boosting margins. The metric fell 16.9% and 17.9% in 2022 and 2023, respectively. Additionally, it exited the second quarter with cash and cash equivalents of $684.8 million while short-term borrowings, net, totaled $73.7 million. Its financial flexibility enables it to take shareholder-friendly moves.

In the second quarter of 2024, Virtu Financial bought back shares worth around $31 million. VIRT announced a cash dividend of 24 cents per share. Its dividend yield of 3% is higher than the industry average of 1.8%.

VIRT Earnings Estimates

The Zacks Consensus Estimate for VIRT’s 2024 earnings is pegged at $2.94 per share, indicating a year-over-year improvement of 59.8%. Virtu Financial beat on earnings in three of the last four quarters, missed on one occasion, with an average surprise of 9.9%. This is depicted in the figure below.

Virtu Financial, Inc. Price and EPS Surprise

Virtu Financial, Inc. price-eps-surprise | Virtu Financial, Inc. Quote

VIRT’s Valuation

The stock is currently trading at a discount. Its forward 12-month price-to-earnings ratio of 10.80X is below the industry average of 14.78X. The company's underlying fundamentals are not weak at all, as evidenced by a Value Score of A. These positive factors are likely to help it maintain its share growth trajectory and continue outperforming the industry, making it an excellent candidate to add to your portfolio.

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Other Stocks to Consider

Investors interested in the broader Finance space may look at some other top-ranked players like Jackson Financial Inc. JXN, WisdomTree, Inc. WT and HIVE Digital Technologies Ltd. HIVE, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Jackson Financial’s current-year earnings is pegged at $17.33 per share, which indicates 35% year-over-year growth. It witnessed two upward estimate revisions in the past 30 days against no downward movement. The consensus mark for JXN’s current-year revenues suggests a 116.7% surge from a year ago.

The Zacks Consensus Estimate for WisdomTree’s 2024 earnings indicates 51.4% year-over-year growth. During the past two months, WT has witnessed one upward estimate revision against none in the opposite direction. It met earnings estimates thrice in the past four quarters and beat once, with an average surprise of 2.3%.

The Zacks Consensus Estimate for HIVE Digital’s current-year earnings suggests a 29.1% year-over-year improvement. During the past month, HIVE has witnessed one upward estimate revision against none in the opposite direction. The consensus mark for current-year revenues is pegged at $111.8 million.

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