A month has gone by since the last earnings report for Virtu Financial (VIRT). Shares have lost about 15.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Virtu Financial due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Virtu Financial Q1 Earnings Beat Estimates, Soar Y/Y
Virtu Financial’s first-quarter 2020 earnings per share of $2.05 beat the Zacks Consensus Estimate by 35.8%. Moreover, the bottom line skyrocketed around 503% year over year.
The company benefited from the market volatility amid the COVID-19 outbreak.
Revenues of $784 million soared 242.4% year over year on the back of heightened market volatility, bid-ask spreads and trading volumes and asset classes. Moreover, the top line surpassed the consensus mark by 33.8%.
Quarterly Operational Update
Adjusted trading income of the company increased 242.8% to $784.5 million year over year.
In the quarter under review, adjusted EBITDA jumped 358.6% to $569.7 million.
Total operating expenses surged 41.8% year over year to $537.8 million.
This upside was owing to higher brokerage, exchange and clearance fees, communication and data processing, employee compensation and payroll taxes, payments for order flow, etc.
Adjusted net trading income from the Marketing Making segment ascended 267% year over year in the quarter under review. Under this segment, adjusted net trading income from Global Equities rose 309.5% year over year while the same from Global FICC, Options and Other climbed 123.1% year over year.
Adjusted net trading income from its Execution Services soared 159% from the prior-year quarter’s figure.
The company's board of directors declared a quarterly cash dividend of 24 cents per share, payable Jun 15, 2020 to its shareholders of record as of Jun 1.
As of Mar 31, 2020, the company had total assets worth $10.9 billion, up 14.3% from the level at 2019 end.
It exited the quarter with total equity of $1.5 billion, up 24.4% from the level on Dec 31, 2019.
The company exited the first quarter with $710.5 million of cash and cash equivalents, down 3% from the 2019-end level.
In the quarter under review, long-term borrowings dipped 0.1% from the level at 2019 end.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 211.39% due to these changes.
At this time, Virtu Financial has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Virtu Financial has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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