Critical Review: Virtu Financial (NYSE:VIRT) & Moelis & Company (NYSE:MC)

Virtu Financial (NYSE:VIRT) and Moelis & Company (NYSE:MC) are both mid-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their risk, valuation, profitability, analyst recommendations, earnings, institutional ownership and dividends.

Institutional & Insider Ownership

45.8% of Virtu Financial shares are held by institutional investors. Comparatively, 91.5% of Moelis & Company shares are held by institutional investors. 46.8% of Virtu Financial shares are held by company insiders. Comparatively, 6.3% of Moelis & Company shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Virtu Financial	13.50%	49.06%	4.28%
Moelis & Company	14.50%	39.59%	17.04%

Dividends

Virtu Financial pays an annual dividend of $0.96 per share and has a dividend yield of 1.6%. Moelis & Company pays an annual dividend of $2.60 per share and has a dividend yield of 4.1%. Virtu Financial pays out 15.9% of its earnings in the form of a dividend. Moelis & Company pays out 90.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Moelis & Company has increased its dividend for 1 consecutive years. Moelis & Company is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Virtu Financial has a beta of 0.62, suggesting that its share price is 38% less volatile than the S&P 500. Comparatively, Moelis & Company has a beta of 1.84, suggesting that its share price is 84% more volatile than the S&P 500.

Valuation & Earnings

This table compares Virtu Financial and Moelis & Company”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Virtu Financial	$3.63 billion	2.61	$468.36 million	$6.02	10.13
Moelis & Company	$1.52 billion	3.31	$233.04 million	$2.87	22.32

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

Analyst Ratings

This is a summary of recent ratings and recommmendations for Virtu Financial and Moelis & Company, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Virtu Financial	1	2	3	1	2.57
Moelis & Company	1	7	2	0	2.10

Virtu Financial currently has a consensus price target of $58.80, suggesting a potential downside of 3.61%. Moelis & Company has a consensus price target of $73.62, suggesting a potential upside of 14.91%. Given Moelis & Company’s higher probable upside, analysts clearly believe Moelis & Company is more favorable than Virtu Financial.

About Virtu Financial

Virtu Financial, Inc., a financial services company, provides data, analytics, and connectivity products to clients worldwide. The company operates in two segments, Market Making and Execution Services. Its product suite includes offerings in execution, liquidity sourcing, analytics and broker-neutral, and multi-dealer platforms in workflow technology. The company’s solutions enable clients to trade on various venues across countries and in multiple asset classes, including global equities, ETFs, foreign exchange, futures, fixed income, cryptocurrencies, and other commodities. Its analytics platform provides a range of pre- and post-trade services, data products, and compliance tools for clients to invest, trade, and manage risk across markets. Virtu Financial, Inc. was founded in 2008 and is headquartered in New York, New York.

About Moelis & Company

Moelis & Co. operates as a holding company. It engages in the provision of financial advisory, capital raising and asset management services to a client base including corporations, governments, sovereign wealth funds and financial sponsors. The firm focuses on clients including large public multinational corporations, middle market private companies, financial sponsors, entrepreneurs and governments. The company was founded by Kenneth David Moelis, Navid Mahmoodzadegan, Jeffrey Raich and Elizabeth Ann Crain in July 2007 and is headquartered in New York, NY.