Virtu Financial(US:VIRT) ZACKSยท2024-09-04 16:06Core Viewpoint - Virtu Financial, Inc. is positioned for growth due to its diversified business model and increasing income from interest and dividends, with a market cap of $4.8 billion [1]. Group 1: Financial Performance - The Market Making segment is expected to contribute significantly to revenue, with anticipated improvements in capture rates and a decline in costs [2]. - Virtu Financial's stock has increased by 67.4% over the past year, outperforming the industry, sector, and S&P 500 Index, which grew by 21.8%, 29.3%, and 25.3% respectively [3]. - The company reported a decline in net brokerage, exchange, clearance fees, and payments for order flow, with decreases of 16.9% in 2022 and 17.9% in 2023, which is expected to enhance margins [5]. - In Q2 2024, Virtu Financial repurchased shares worth approximately $31 million and announced a cash dividend of 24 cents per share, resulting in a dividend yield of 3.1%, higher than the industry average of 2% [6]. Group 2: Growth Drivers - Retail momentum is expected to continue, supported by growth initiatives such as expansion into options, cryptocurrency, ETF block trading, and IPO investing [3]. - The Execution Services business is set for growth due to technological advancements and the integration of new solutions, despite market volatility [4]. - The Zacks Consensus Estimate for 2024 earnings is $2.86 per share, reflecting a year-over-year improvement of 55.4%, with a stable estimate for 2025 suggesting further growth of 1.9% [7]. Group 3: Valuation - The stock is currently trading at a forward 12-month price-to-earnings ratio of 10.74X, below the industry average of 13.81X, indicating it is undervalued [8]. - The company's fundamentals are strong, as evidenced by a Value Score of A, which supports its potential for continued share growth and industry outperformance [8].