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Bull Of The Day: Virtu Financial (VIRT)

Brian Bolan
Updated

Virtu Financial (VIRT)is a High Frequency Trading (HFT) firm and is a Zacks Rank #1 (Strong Buy). The company just reported a solid quarter. Let's take a look at why this stock is The Bull Of The Day.

Description

Virtu Financial provides market making and liquidity services through its proprietary, multi-asset, and multi-currency technology platform to the financial markets worldwide.  Virtu Financial was founded in 2008 and is headquartered in New York, New York.

Earnings History

The last two quarters were really good, but the two preceding those were pretty soft.

The most recent quarter saw EPS of $0.22 and that was $0.09 ahead of estimates for a positive earnings surprise of 69%.

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The report before that was a 60% positive surprise, just off a much smaller basis. Before that, there was a 43% miss and an 11% miss before that. So the earnings history isn’t the best, but it is far from the worst seeing as the last two beats were really strong.

Estimates

So this is a Zacks Rank #1 (Strong Buy) yet I only see 1 revision higher for this year and next year over the last 60 days. That could also speak to the lack of coverage on this name. In any event, the Zacks Consensus Estimate for 2018 has moved from $0.87 90 days ago to $1.11 60 days ago and then to $1.59 which is where it stands right now. Those are some big moves and thanks in part to the good earnings release.

Valuation

I see VIRT trading at 21x forward earnings and this multiple is hard to compare to financials. That is because most of VIRT is based on the idea of it being a tech company. The revenue growth of 70% from the previous quarter and 169% from the year-ago period tell me that this HFT can handle the volatility that has come about in a big way.

The price to book is over 5x and price to sales is over 6x, both measures are high anyway you look at them. I think this stock runs, as volatility is here to stay for the time being. Trump can be both good and bad for stocks, and that recipe makes VIRT a must own.

Chart

Virtu Financial, Inc. Price and Consensus

Virtu Financial, Inc. Price and Consensus | Virtu Financial, Inc. Quote

 

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