Critical Survey: Virtu Financial (VIRT) versus Futu (FHL)

Virtu Financial (NASDAQ:VIRT) and Futu (NASDAQ:FHL) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, profitability, dividends and earnings.

Dividends

Virtu Financial pays an annual dividend of $0.96 per share and has a dividend yield of 3.9%. Futu does not pay a dividend. Virtu Financial pays out 49.0% of its earnings in the form of a dividend.

Profitability

This table compares Virtu Financial and Futu’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Virtu Financial 7.56% 19.12% 3.79%
Futu N/A N/A N/A

Insider & Institutional Ownership

55.9% of Virtu Financial shares are owned by institutional investors. 63.7% of Virtu Financial shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Virtu Financial and Futu’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Virtu Financial $1.88 billion 2.50 $289.44 million $1.96 12.63
Futu N/A N/A N/A N/A N/A

Virtu Financial has higher revenue and earnings than Futu.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Virtu Financial and Futu, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Virtu Financial 0 4 4 0 2.50
Futu 0 2 0 0 2.00

Virtu Financial presently has a consensus target price of $27.63, suggesting a potential upside of 11.57%. Futu has a consensus target price of $17.62, suggesting a potential upside of 31.39%. Given Futu’s higher probable upside, analysts plainly believe Futu is more favorable than Virtu Financial.

Summary

Virtu Financial beats Futu on 9 of the 11 factors compared between the two stocks.

Virtu Financial Company Profile

Virtu Financial, Inc., together with its subsidiaries, provides market making and liquidity services through its proprietary, multi-asset, and multi-currency technology platform to the financial markets worldwide. The company's Market Making segment principally consists of market making in the cash, futures, and options markets across equities, options, fixed income, currencies, and commodities. Its Execution Services segment comprises agency-based trading and trading venues, which offer execution services in equities, ETFs, futures, and fixed income to institutions, banks, and broker dealers. Virtu Financial, Inc. was founded in 2008 and is headquartered in New York, New York.

Futu Company Profile

Futu Holdings Limited operates digitized brokerage platform in Hong Kong, China, Japan, the United States, and internationally. Its platform offers investing services, including trade execution and margin financing which allows to trade securities, such as stocks, warrants, options and exchange-traded funds, or ETFs, across different markets; market data and information; and securities lending services. The company was founded in 2011 and is headquartered in Sheung Wan, Hong Kong.

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