What's in Store for Virtu Financial's (VIRT) Q1 Earnings?

Virtu Financial, Inc. VIRT will release first-quarter 2020 results on May 7, before market open.

The company’s fourth-quarter 2019 earnings per share of 27 cents came in line with the Zacks Consensus Estimate. However, the bottom line declined 20.6% year over year, mainly due to lower trading income.

Revenues in the quarter suffered due to muted volatility and decline in volumes across global markets.

Let’s see, how things are shaping up prior to this announcement.

Virtu Financial gains traction from market volatility and thus, the plaguing coronavirus pandemic is likely to have helped it earn a sweet spot in the first quarter during which the outbreak occurred. The pandemic proved to be a boon for the company as market volatility soared in its aftermath. With greater instability, the need for liquidity increases, which in turn, provides the company with more trading and profit opportunities. This is what expected to have contributed to its first-quarter earnings. The company is likely to have witnessed volume expansion in the to-be reported quarter.

The Zacks Consensus Estimate for its bottom line stands at $1.05, indicating a skyrocketing upside of 208.8% from the year-ago reported figure.

The company’s revenues are likely to have grown from strength in both its primary business segments, namely Market Making and Execution Services. The Zacks Consensus Estimate for the top line stands at $586 million, suggesting a 156% improvement from the prior-year reported number.

The company might have gained from a series of key organic growth initiatives taken last year.

Per the company’s last earnings call, management expected an operating expense run rate of $155 million for every quarter.

However, the company is likely to have persistently suffered escalating costs, rising from higher payments for order flow; communication and data processing; employee compensation and payroll taxes; operations and administrative expenses; amortization of purchased intangibles and acquired capitalized software, etc.

What the Quantitative Model States

Our proven model predicts an earnings beat for Virtu Financial this reporting cycle. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Virtu Financial has an Earnings ESP of +39.67%. This is because the Most Accurate Estimate is pegged at $1.47, higher than the Zacks Consensus Estimate of $1.05.  You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Virtu Financial, Inc. Price and EPS Surprise

Virtu Financial, Inc. Price and EPS Surprise

Virtu Financial, Inc. price-eps-surprise | Virtu Financial, Inc. Quote

Zacks Rank: Virtu Financial sports a Zacks Rank of 1.

Other Stocks to Consider

Here are a few other stocks worth considering from the finance sector with the perfect mix of elements to beat on earnings in the respective upcoming releases:

Brighthouse Financial Inc. BHF has a Zacks Rank of 3 and an Earnings ESP of +5.03%. 

Green Dot Corporation GDOT is Zacks #3 Ranked and has an Earnings ESP of +3.83%.

Repay Holdings Corporation RPAY has an Earnings ESP of +2.27% and is a #2 Ranked player.

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