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Virtu Financial Rallies More Than 40% YTD: More Room to Run?

Virtu Financial Inc.  VIRT has been favored by investors on the back of its solid segmental contributions and an impressive portfolio.

Shares of this Zacks Rank #1 (Buy) company have surged 43.3% year to date against its industry’s decline of 29.3%. The price performance looks stellar when compared to other companies’ stock movements in the same space, such as PRA Group, Inc. PRAA, Global Payments Inc. GPN and MoneyGram International, Inc. MGI, which have lost 11%, 10.7% and 23.8%, respectively, in the same time frame. While PRA Group and Global Payments carry a Zacks Rank #3 (Hold), MoneyGram has a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank stocks here.

The company’s return on equity — a profitability measure — came in at 38.6%, higher than the industry average of 22.2%.

Is the Bull Run Likely to Continue?

Recently, the company’s first-quarter earnings 2020 of $2.05 skyrocketed 503% year over year, mainly gaining traction from the current COVID-19 pandemic. The company is a high-frequency trading firm that benefits from market volatility. As a result, the coronavirus effect on the market helped it earn a sweet spot. With greater instability, there is increased need for liquidity, which in turn, provides the company with plenty of trading and profit opportunities.

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 company’s diversified business strengthens its position for the long haul. The company has been witnessing growth in both its customer and non-customer market making businesses.

Also, its Market Making segment has been contributing a lion’s share to the company’s overall revenues. In the first quarter, adjusted net trading income from the segment ascended 267% year over year.

Further, the company's Execution Services segment has been witnessing growth since the ITG buyout, which not only diversified its revenues but also leveraged its core technology.

We expect the company to continue performing well because of the persistence of market volatility as a coronavirus fallout as well as its solid segments.

For the current year, the Zacks Consensus Estimate earnings stands at $3.48 per share, reflecting an upside of 262.5% from the year-ago reported figure.

Over the past seven days, the company has witnessed its 2020 earnings move 31.2% north.

Zacks’ Single Best Pick to Double

From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.

This young company’s gigantic growth was hidden by low-volume trading, then cut short by the coronavirus. But its digital products stand out in a region where the internet economy has tripled since 2015 and looks to triple again by 2025.

Its stock price is already starting to resume its upward arc. The sky’s the limit! And the earlier you get in, the greater your potential gain.

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