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Are Investors Undervaluing Virtu Financial (VIRT) Right Now?

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·2 min read
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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One stock to keep an eye on is Virtu Financial (VIRT). VIRT is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 9.50. This compares to its industry's average Forward P/E of 13.96. Over the past year, VIRT's Forward P/E has been as high as 12.14 and as low as 5.31, with a median of 8.42.

Another valuation metric that we should highlight is VIRT's P/B ratio of 3.15. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 4.33. Over the past 12 months, VIRT's P/B has been as high as 3.34 and as low as 2.29, with a median of 2.82.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. VIRT has a P/S ratio of 1.78. This compares to its industry's average P/S of 2.67.

These are only a few of the key metrics included in Virtu Financial's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, VIRT looks like an impressive value stock at the moment.


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