Virtu Financial (VIRT) appears an attractive pick given a noticeable improvement in the company's earnings outlook. The stock has been a strong performer lately, and the momentum might continue with analysts still raising their earnings estimates for the company.
The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this high-speed trading company, should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. This insight is at the core of our stock rating tool -- the Zacks Rank.
The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.
For Virtu Financial, strong agreement among the covering analysts in revising earnings estimates upward has resulted in meaningful improvement in consensus estimates for the next quarter and full year.
Current-Quarter Estimate Revisions
The earnings estimate of $0.88 per share for the current quarter represents a change of +15.79% from the number reported a year ago.
The Zacks Consensus Estimate for Virtu Financial has increased 5.84% over the last 30 days, as two estimates have gone higher while one has gone lower.
Current-Year Estimate Revisions
The company is expected to earn $3.24 per share for the full year, which represents a change of -8.73% from the prior-year number.
There has been an encouraging trend in estimate revisions for the current year as well. Over the past month, four estimates have moved up for Virtu Financial versus one negative revision. This has pushed the consensus estimate 6.82% higher.
Favorable Zacks Rank
The promising estimate revisions have helped Virtu Financial earn a Zacks Rank #1 (Strong Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.
Bottom Line
Investors have been betting on Virtu Financial because of its solid estimate revisions, as evident from the stock's 12% gain over the past four weeks. As its earnings growth prospects might push the stock higher, you may consider adding it to your portfolio right away.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
