Nasdaq (NDAQ) and Virtu Financial (VIRT) Head-To-Head Survey

Nasdaq (NASDAQ: NDAQ) and Virtu Financial (NASDAQ:VIRT) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their earnings, analyst recommendations, valuation, institutional ownership, dividends, profitabiliy and risk.

Risk and Volatility

Nasdaq has a beta of 0.76, meaning that its stock price is 24% less volatile than the S&P 500. Comparatively, Virtu Financial has a beta of 0.42, meaning that its stock price is 58% less volatile than the S&P 500.

Dividends

Nasdaq pays an annual dividend of $1.52 per share and has a dividend yield of 2.1%. Virtu Financial pays an annual dividend of $0.96 per share and has a dividend yield of 5.9%. Nasdaq pays out 183.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Virtu Financial pays out 133.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Virtu Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of recent ratings for Nasdaq and Virtu Financial, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Nasdaq 0 6 3 0 2.33
Virtu Financial 2 0 0 0 1.00

Nasdaq presently has a consensus target price of $73.11, indicating a potential upside of 1.81%. Virtu Financial has a consensus target price of $14.50, indicating a potential downside of 10.77%. Given Nasdaq’s stronger consensus rating and higher possible upside, research analysts plainly believe Nasdaq is more favorable than Virtu Financial.

Insider and Institutional Ownership

74.7% of Nasdaq shares are owned by institutional investors. Comparatively, 90.6% of Virtu Financial shares are owned by institutional investors. 1.6% of Nasdaq shares are owned by company insiders. Comparatively, 69.9% of Virtu Financial shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Nasdaq 3.87% 11.77% 4.47%
Virtu Financial 4.41% 20.72% 2.79%

Earnings & Valuation

This table compares Nasdaq and Virtu Financial’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Nasdaq $3.77 billion 3.15 $1.19 billion $0.83 86.52
Virtu Financial $567.89 million 1.16 $29.28 million $0.72 22.57

Nasdaq has higher revenue and earnings than Virtu Financial. Virtu Financial is trading at a lower price-to-earnings ratio than Nasdaq, indicating that it is currently the more affordable of the two stocks.

Summary

Nasdaq beats Virtu Financial on 9 of the 16 factors compared between the two stocks.

About Nasdaq

Nasdaq, Inc. (Nasdaq) is a holding company. The Company is a provider of trading, clearing, exchange technology, regulatory, securities listing, information and public company services. It manages, operates and provides its products and services through four segments: Market Services, Corporate Services, Information Services and Market Technology. Its global offerings include trading and clearing across various asset classes, trade management services, data products, financial indexes, capital formation solutions, corporate solutions, and market technology products and services. Its technology markets across the globe, supporting equity derivative trading, clearing and settlement, cash equity trading, fixed income trading and various other functions. Its Market Services segment include its equity derivative trading and clearing, cash equity trading, fixed income clearing corporation and trade management services businesses. Its Corporate Solutions business serves corporate clients.

About Virtu Financial

Virtu Financial, Inc. is a holding company. The Company is a technology-enabled market maker and liquidity provider to the financial markets across the world. It is engaged in buying or selling a range of securities and other financial instruments and earning small bid/ask spreads across various transactions. It has a single, multi-asset, multi-currency technology platform, through which it provides quotations to buyers and sellers in equities, commodities, currencies, options, fixed income and other securities on exchanges, markets and liquidity pools in various countries around the world. It makes markets in a range of different assets classes, such as Americas Equities; Europe, the Middle East and Africa (EMEA) Equities; Asia Pacific (APAC) Equities; Global Commodities; Global Currencies, and Options, Fixed Income and Other Securities. It makes markets for global banks, brokers and other intermediaries, and indirectly provides services to retail and institutional investors.

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