Virtu Financial (VIRT) AI Stock Analysis

• Market Cap: $4.98B
• Dividend Yield: 2.88%
• Average Volume (3M): 882.22K
• Price to Earnings (P/E): 7.2
• Beta (1Y): 0.40
• Revenue Growth: 27.66%
• EPS Growth: 131.25%
• Country: US
• Employees: 969
• Sector: Financial
• Sector Strength: 70
• Industry: Financial - Capital Markets
• EPS (TTM): 1.05
• Shares Outstanding: 84,906,700
• 10 Day Avg. Volume: 943,687
• 30 Day Avg. Volume: 882,217
• PEG Ratio: 0.10
• Price to Book (P/B): 2.49
• Price to Sales (P/S): 1.08
• P/FCF Ratio: 5.73
• Enterprise Value/Market Cap: 0.99
• Enterprise Value/Revenue: 1.40
• Enterprise Value/Gross Profit: 2.28
• Enterprise Value/Ebitda: 2.74
• 1Y Price Target: $41.33
• Price Target Upside: 27.05% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 3
• EPS Forecast (FY): 4.48
• Revenue Forecast (FY): $1.94B

• Rating: 64 Neutral
• Price Target: $36.00 ▲(10.67% Upside)

Virtu Financial's strong earnings call performance and attractive valuation are offset by technical indicators suggesting bearish momentum and financial challenges related to high leverage and declining free cash flow. The company's strategic initiatives and recent corporate events provide a positive outlook, but financial risks remain a concern.

Positive Factors

Revenue Growth

Consistent revenue growth and high margins indicate robust business operations and effective market strategies, supporting long-term profitability.

Strategic Expansion

Expanding the capital base positions Virtu to capture growth opportunities, particularly in emerging markets like crypto and options, enhancing future revenue streams.

Leadership Stability

Stable leadership with aligned performance goals ensures strategic continuity and can bolster stakeholder confidence, supporting long-term company objectives.

Negative Factors

High Leverage

High leverage can increase financial risk, potentially limiting flexibility in capital allocation and impacting the company’s ability to navigate economic downturns.

Declining Free Cash Flow

Decreasing free cash flow may challenge liquidity and limit the company's ability to invest in growth opportunities or weather financial stress.

Market Making Revenue Decline

A decline in Market Making revenue suggests potential challenges in core operations, which could impact overall financial performance if not addressed.

Virtu Financial Business Overview & Revenue Model

Company Description

Virtu Financial, Inc., a financial services company, provides data, analytics, and connectivity products to clients worldwide. The company operates in two segments, Market Making and Execution Services. Its product suite includes offerings in execution, liquidity sourcing, analytics and broker-neutral, and multi-dealer platforms in workflow technology. The company's solutions enable clients to trade on various venues across countries and in multiple asset classes, including global equities, ETFs, foreign exchange, futures, fixed income, cryptocurrencies, and other commodities. Its analytics platform provides a range of pre- and post-trade services, data products, and compliance tools for clients to invest, trade, and manage risk across markets. Virtu Financial, Inc. was founded in 2008 and is headquartered in New York, New York.

How the Company Makes Money

Virtu Financial primarily generates revenue through its market making activities, where it earns profits from the bid-ask spread on securities trading. The company engages in high-frequency trading, executing numerous transactions at rapid speeds to take advantage of price discrepancies across different markets. Key revenue streams include transaction fees from executing trades, revenues from proprietary trading, and income from investment in financial instruments. Additionally, Virtu often enters into partnerships with exchanges and financial institutions, enhancing its trading volume and improving its market presence, which further contributes to its earnings. The firm's ability to provide liquidity in various asset classes also allows it to capitalize on market volatility, generating additional revenue during periods of heightened trading activity.

Virtu Financial Financial Statement Overview

Summary

Virtu Financial shows strong profitability and revenue growth with a high EBIT margin of 79.74% and net profit margin of 53.36%. However, challenges include high leverage with a debt-to-equity ratio of 5.73 and declining free cash flow growth by 34.98%.

Income Statement

Virtu Financial has demonstrated consistent revenue growth, with a TTM revenue growth rate of 3.49%. The company maintains strong profitability, evidenced by a high EBIT margin of 79.74% and a net profit margin of 53.36% in the TTM period. However, the gross profit margin has decreased significantly from previous years, indicating potential cost pressures or pricing challenges.

Balance Sheet

The balance sheet shows a high debt-to-equity ratio of 5.73 in the TTM period, indicating significant leverage, which could pose financial risk. However, the return on equity is robust at 131.58%, suggesting effective use of equity to generate profits. The equity ratio is relatively low, reflecting a higher reliance on debt financing.

Cash Flow

The cash flow statement reveals a decline in free cash flow growth by 34.98% in the TTM period, which may impact liquidity. The operating cash flow to net income ratio is strong at 1.48, indicating good cash generation relative to net income. However, the free cash flow to net income ratio has decreased, suggesting potential challenges in maintaining cash flow levels.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	3.50B	2.88B	2.29B	2.36B	2.81B	3.24B
Gross Profit	2.15B	1.77B	1.39B	1.35B	1.69B	2.09B
EBITDA	1.79B	1.39B	1.05B	1.01B	1.35B	1.74B
Net Income	422.56M	276.42M	142.04M	265.03M	476.88M	649.20M
Balance Sheet
Total Assets	21.27B	15.36B	14.47B	10.58B	10.32B	9.97B
Cash, Cash Equivalents and Short-Term Investments	707.87M	872.51M	820.44M	981.58M	1.07B	889.56M
Total Debt	8.35B	5.71B	6.93B	3.73B	3.60B	3.43B
Total Liabilities	19.57B	13.87B	13.06B	8.93B	8.46B	8.11B
Stockholders Equity	1.45B	1.25B	1.20B	1.34B	1.55B	1.47B
Cash Flow
Free Cash Flow	339.20M	544.68M	415.65M	679.60M	1.15B	1.00B
Operating Cash Flow	400.48M	598.99M	491.78M	706.80M	1.17B	1.06B
Investing Cash Flow	-43.97M	-61.85M	-94.48M	-29.53M	-87.35M	-2.56M
Financing Cash Flow	-341.10M	-469.56M	-585.03M	-735.75M	-957.86M	-839.92M

Virtu Financial Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 32.53
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VIRT, the sentiment is Negative. The current price of 32.53 is below the 20-day moving average (MA) of 33.65, below the 50-day MA of 34.30, and below the 200-day MA of 37.97, indicating a bearish trend. The MACD of -0.40 indicates Positive momentum. The RSI at 39.48 is Neutral, neither overbought nor oversold. The STOCH value of 45.21 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for VIRT.

Virtu Financial Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MC	78 Outperform	$5.98B	24.96	51.98%	3.69%	51.19%	456.59%
PJT	71 Outperform	$8.80B	27.60	91.85%	0.58%	23.16%	64.04%
MKTX	68 Neutral	$6.27B	28.71	15.88%	1.66%	3.96%	-20.33%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
PIPR	67 Neutral	$6.51B	27.20	19.30%	1.63%	12.77%	36.43%
VIRT	64 Neutral	$4.98B	7.18	29.43%	2.88%	27.66%	131.25%
SNEX	58 Neutral	$5.39B	17.50	14.47%	―	32.53%	13.38%