Virtu Financial Stock Is Belie
Virtu Financial’s stock (NAS: VIRT, 30-year Financials) is considered to be fairly valued, as calculated by GuruFocus Value. The GuruFocus Value is GuruFocus’s estimate of the fair value at which the stock is to trade. It is calculated based on the historical multiples at which the stock has traded, the company’s past growth, and analysts’ estimates of the company’s future performance. If a stock’s price is significantly above the GF value line, it is overvalued and its future performance may be poor. On the other hand, if it is significantly below the GF value line, its future return is likely to be higher. At its current price of $ 31.66 per share and market cap of $ 6.1 billion, Virtu Financial stock is showing all signs of a fair valuation. The GF value for Virtu Financial is shown in the table below.
Given that Virtu Financial is properly priced, its long-term stock return is expected to be close to the growth rate of its business, which has averaged 17.3% over the past five years.
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Companies with poor financial strength present investors with a high risk of permanent capital loss. To avoid a permanent loss of capital, an investor should do his research and consider the financial strength of a company before deciding to buy stocks. The two cash-to-debt ratio and covering a company’s interests are a great way to understand its financial strength. Virtu Financial has a cash-to-debt ratio of 0.26, which is worse than 87% of companies in the capital markets industry. The overall financial strength of Virtu Financial is 4 out of 10, which indicates that the financial strength of Virtu Financial is low. Here is Virtu Financial’s debt and cash flow over the past few years:
It is less risky to invest in profitable companies, especially those whose profitability is constant over the long term. A business with high profit margins is generally a safer investment than one with low profit margins. Virtu Financial has been profitable 9 in the past 10 years. In the past twelve months, the company reported sales of $ 3.2 billion and earnings of $ 5.18 per share. His the operating margin is 46.54%, which ranks better than 79% of companies in the capital markets industry. Overall, Virtu Financial’s profitability is ranked 7 out of 10, indicating fair profitability. Here is Virtu Financial’s turnover and net profit over the past few years:
Growth is probably one of the most important factors in the valuation of a business. GuruFocus research has shown that growth is closely tied to the long-term performance of a company’s stocks. If a company’s business is growing, the business typically creates value for its shareholders, especially if the growth is profitable. Likewise, if the income and profits of a business decrease, the value of the business will decrease. Virtu Financial’s 3-year average revenue growth rate is over 76% for companies in the capital markets industry. Virtu Financial’s 3-year average EBITDA growth rate is 50.9%, which ranks better than 87% of companies in the capital markets industry.
Another way to assess a company’s profitability is to compare its return on invested capital (ROIC) to its weighted cost of capital (WACC). Return on invested capital (ROIC) The extent to which a business generates cash flow relative to the capital it has invested in its business. The weighted average cost of capital (WACC) is the rate that a company should pay on average to all of its security holders to finance its assets. If the ROIC is higher than the WACC, it indicates that the company is creating shareholder value. Over the past 12 months, Virtu Financial’s ROIC was 16.09, while its WACC stood at 1.62. Virtu Financial’s historical ROIC vs WACC comparison is shown below:
In conclusion, the share of Virtu Financial (NAS: VIRT, 30-year Financials) is estimated at its fair value. The company’s financial situation is bad and its profitability is fair. Its growth ranks better than 87% of companies in the capital markets sector. To find out more about the Virtu Financial share, you can view its 30-year financial data here.
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