Financial services company Virtu Financial, Inc. VIRT is gaining attention as its earnings estimates for 2025 and 2026 have moved higher over the past week. The company delivered a stellar fourth-quarter 2024 performance, driven by strong revenue growth in its Market Making and Execution Services segments. Higher net trading income and commissions fueled these gains. The favorable market conditions and the current political climate are major tailwinds for the company.

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Virtu Financial’s fourth-quarter 2024 adjusted EPS of $1.14 outpaced the Zacks Consensus Estimate by 32.6% and jumped more than four-fold year over year. Adjusted net trading income climbed 75% year over year to $457.7 million, beating estimates by 14.7%.Meanwhile, adjusted EBITDA surged to $283.5 million, up from $99 million in the prior year, with an improved EBITDA margin of 57.5% (+2,400 basis points). For the full year 2024, adjusted net trading income grew 41.2% in Market Making and 10.6% in Execution Services, reflecting the strength of its core business.

For a detailed analysis, read our blog: Virtu Financial Q4 Earnings Beat Estimates on Strong Market Making.

Analysts Turn Bullish on Virtu Financial

Following stellar financial results, analysts are seemingly turning optimistic on the stock and upwardly revising earnings estimates.

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The Zacks Consensus Estimate for Virtu Financial’s 2025 and 2026 adjusted net trading income is pegged at $1.59 billion and $1.64 billion, respectively. It has a solid track record, having beaten earnings estimates for four consecutive quarters with an average surprise of 25.1%.

Virtu Financial’s Key Growth Drivers

Virtu Financial is well-positioned to benefit from potential regulatory shifts under the new administration, which is expected to take a more market-friendly approach. Fewer new SEC regulations could create a more favorable trading environment for firms.

The Execution Services segment continues to benefit from the ITG acquisition, which has helped diversify revenue streams and strengthen Virtu Financial’s technology edge. The company’s global expansion efforts further reduce market concentration risks and create new growth opportunities.

In the second half of last year, its Triton Valor EMS established direct connectivity to CONNEQTOR, the Tokyo Stock Exchange’s ETF trading platform. More strategic deals are expected this year, reinforcing Virtu Financial’s growth trajectory. Additionally, the company’s ongoing investments in efficiency improvements are boosting profitability and margins, a trend reflected in its rising earnings estimates.

It exited the fourth quarter with cash and cash equivalents of $872.5 million, which rose from the 2023-end level of $820.4 million. This was significantly higher than the short-term borrowings of $38.5 million.

Virtu Financial’s Commitment to Shareholders

VIRT remains committed to returning capital to shareholders. In 2024, the company repurchased 6.7 million shares worth $172.2 million. Since November 2020, the start of the repurchase program, it bought $1.3 billion worth of shares. It still has $423.8 million in remaining share buyback authorization. Although the company is sticking to its quarterly cash dividend of 24 cents per share, its dividend yield of 2.61% is still higher than the industry average of 167%.

VIRT’s Price Performance & Valuation

VIRT stock has surged 120.9% over the past year, outperforming the industry’s 20.7% growth. Peers like Tradeweb Markets Inc. TW (+25.1%) and CME Group Inc. CME (+20.1%) have underperformed Virtu Financial. Meanwhile, the S&P 500 has gained 23.5% in the same period.

One-Year Price Performance Comparison – VIRT, TW, CME, Industry & S&P 500

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Virtu Financial appears undervalued relative to its industry peers when looking at its forward P/E ratio of 10.26X, compared to the industry average of 16.45X, indicating significant upside potential. In comparison, Tradeweb trades at 37.63X and CME Group at 23.94X. VIRT has a Value Score of B.

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Final Verdict: Buy Virtu Financial Stock Now

Given its strong financial performance, improving margins and favorable market conditions, Virtu Financial presents a compelling buying opportunity. The company’s consistent earnings beats, shareholder-friendly policies and global expansion efforts further bolster its growth outlook.

Virtu Financial remains undervalued compared to peers, suggesting room for further gains. Coupled with its robust balance sheet and ongoing buybacks, VIRT sports a Zacks Rank #1 (Strong Buy) for investors seeking value and growth in the financial services space. You can see the complete list of today’s Zacks #1 Rank stocks here.

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