Critical Analysis: Virtu Financial (VIRT) & Its Peers

Virtu Financial (NASDAQ: VIRT) is one of 31 publicly-traded companies in the “Security brokers & dealers” industry, but how does it contrast to its competitors? We will compare Virtu Financial to related businesses based on the strength of its risk, dividends, earnings, profitability, analyst recommendations, valuation and institutional ownership.

Analyst Recommendations

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This is a breakdown of current ratings for Virtu Financial and its competitors, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Virtu Financial 0 5 2 0 2.29
Virtu Financial Competitors 325 1388 1449 69 2.39

Virtu Financial presently has a consensus target price of $26.57, suggesting a potential downside of 28.57%. As a group, “Security brokers & dealers” companies have a potential upside of 2.02%. Given Virtu Financial’s competitors stronger consensus rating and higher possible upside, analysts clearly believe Virtu Financial has less favorable growth aspects than its competitors.

Volatility and Risk

Virtu Financial has a beta of -0.59, meaning that its share price is 159% less volatile than the S&P 500. Comparatively, Virtu Financial’s competitors have a beta of 8.84, meaning that their average share price is 784% more volatile than the S&P 500.

Valuation & Earnings

This table compares Virtu Financial and its competitors gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Net Income Price/Earnings Ratio
Virtu Financial $1.02 billion $2.93 million 65.26
Virtu Financial Competitors $5.86 billion $744.86 million 24.60

Virtu Financial’s competitors have higher revenue and earnings than Virtu Financial. Virtu Financial is trading at a higher price-to-earnings ratio than its competitors, indicating that it is currently more expensive than other companies in its industry.

Insider & Institutional Ownership

47.4% of Virtu Financial shares are held by institutional investors. Comparatively, 65.9% of shares of all “Security brokers & dealers” companies are held by institutional investors. 69.9% of Virtu Financial shares are held by insiders. Comparatively, 21.5% of shares of all “Security brokers & dealers” companies are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Dividends

Virtu Financial pays an annual dividend of $0.96 per share and has a dividend yield of 2.6%. Virtu Financial pays out 168.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. As a group, “Security brokers & dealers” companies pay a dividend yield of 1.6% and pay out 35.0% of their earnings in the form of a dividend.

Profitability

This table compares Virtu Financial and its competitors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Virtu Financial 1.69% 10.73% 1.53%
Virtu Financial Competitors 6.71% 5.32% 5.87%

Summary

Virtu Financial competitors beat Virtu Financial on 11 of the 15 factors compared.

About Virtu Financial

Virtu Financial, Inc. is a holding company. The Company is a technology-enabled market maker and liquidity provider to the financial markets across the world. It is engaged in buying or selling a range of securities and other financial instruments and earning small bid/ask spreads across various transactions. It has a single, multi-asset, multi-currency technology platform, through which it provides quotations to buyers and sellers in equities, commodities, currencies, options, fixed income and other securities on exchanges, markets and liquidity pools in various countries around the world. It makes markets in a range of different assets classes, such as Americas Equities; Europe, the Middle East and Africa (EMEA) Equities; Asia Pacific (APAC) Equities; Global Commodities; Global Currencies, and Options, Fixed Income and Other Securities. It makes markets for global banks, brokers and other intermediaries, and indirectly provides services to retail and institutional investors.

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