Yahoo Finance Can Virtu Financial (VIRT) Q1 Earnings Beat on Lower Expenses?
Virtu Financial, Inc. VIRT is set to beat on earnings in the first quarter of 2023, the results of which are expected to be released on Apr 20, before the opening bell.
In the last reported quarter, the leading financial services and products provider reported adjusted earnings per share of 37 cents, missing the Zacks Consensus Estimate by 30.2%. Lower commissions and trading income, and higher interest and dividend expenses affected the results. Further, weaker performance in the Market Making and Execution Services units hurt the company. The negatives were partially offset by lower operating expenses.
Now, let us see how things have shaped up prior to the first-quarter earnings announcement.
The Trend in Estimate Revision
The Zacks Consensus Estimate for first-quarter earnings per share of 60 cents has witnessed two upward estimate revisions in the past 30 days against one movement in the opposite direction. The estimated figure, however, suggests a decrease of 52.8% from the prior-year reported number. Our estimate for first-quarter earnings of 56 cents per share suggests a 56.3% year-over-year decline.
Virtu Financial beat the consensus estimate in two of the prior four quarters and missed on the other two occasions, with the average negative surprise being 4.5%. This is depicted in the graph below:
Virtu Financial, Inc. Price and EPS Surprise
Virtu Financial, Inc. price-eps-surprise | Virtu Financial, Inc. Quote
The Zacks Consensus Estimate for first-quarter revenues of $326.2 million indicates a 35.4% decrease from the year-ago reported figure while our estimate suggests a 36.3% decline.
What the Quantitative Model Suggests
Our proven model predicts a likely earnings beat for Virtu Financial this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.
Earnings ESP: Earnings ESP for the company is currently +4.79%. The Most Accurate Estimate is currently pegged at 63 cents per share, higher than the Zacks Consensus Estimate of 60 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Virtu Financial currently holds a Zacks Rank #3.
Factors to Note
Virtu Financial is expected to have witnessed lower trading income in the quarter under review from both its operating segments due to various reasons including reduced commissions.
Both the Zacks Consensus Estimate and our estimate for first-quarter adjusted net trading income from the Market Making segment indicate an almost 41% year-over-year decline. The consensus mark for the same for the Execution Services segment indicates a 21.4% decline from a year ago while our estimate predicts a 23% slump.
Also, the Zacks Consensus Estimate for commissions, net and technology services predicts an 8.1% decline from a year ago while our estimate indicates a 16.3% fall.
The factors stated above are likely to have positioned the company for a year-over-year decline in the profit levels for the quarter under review. However, lower expenses and higher interest and dividends income are expected to have provided some respite, equipping the company with enough ammunition to pull an earnings beat this time around.
Our estimate for first-quarter total operating expenses currently stands at $434.1 million, suggesting a 5.5% decrease from the prior-year level on lower brokerage, exchange and clearance fees, and communication and data processing.
Moreover, the Zacks Consensus Estimate for interest and dividends income for the first quarter is pegged at $24.6 million, signaling a 17.3% year-over-year increase, while our estimate suggests a 34.5% jump.
Other Stocks That Warrant a Look
Here are some other companies from the broader finance space that you may also want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this time around:
Owl Rock Capital Corporation ORCC has an Earnings ESP of +0.47% and is a Zacks #2 Ranked player. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Owl Rock Capital’s bottom line for the to-be-reported quarter is pegged at 43 cents per share, implying a 38.7% jump from the year-ago figure. ORCC beat earnings estimates in three of the past four quarters and missed once, with an average surprise of 2.1%.
Aon plc AON has an Earnings ESP of +1.31% and a Zacks Rank of 3.
The Zacks Consensus Estimate for AON’s bottom line for the to-be-reported quarter is pegged at $5.25 per share, which witnessed two upward estimate revisions in the past 30 days against none in the opposite direction. AON beat earnings estimates in three of the past four quarters and missed once, with an average surprise of 2.1%.
MarketAxess Holdings Inc. MKTX has an Earnings ESP of +0.33% and a Zacks Rank of 3.
The Zacks Consensus Estimate for MarketAxess’ bottom line for the to-be-reported quarter is pegged at $1.89 per share, suggesting a 9.3% year-over-year increase. MKTX beat earnings estimates in all the past four quarters, with an average surprise of 3.8%.
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Aon plc (AON) : Free Stock Analysis Report
Owl Rock Capital Corporation (ORCC) : Free Stock Analysis Report
MarketAxess Holdings Inc. (MKTX) : Free Stock Analysis Report
Virtu Financial, Inc. (VIRT) : Free Stock Analysis Report
