Head-To-Head Contrast: Virtu Financial (VIRT) versus Intercontinental Exchange (ICE)

Virtu Financial (NASDAQ: VIRT) and Intercontinental Exchange (NYSE:ICE) are both mid-cap financials companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, analyst recommendations, earnings, institutional ownership, risk, profitability and valuation.

Profitability

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

Net Margins Return on Equity Return on Assets
Virtu Financial 0.13% 11.56% 1.60%
Intercontinental Exchange 27.91% 11.01% 2.18%

Valuation and Earnings

This table compares Virtu Financial and Intercontinental Exchange’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Virtu Financial $702.27 million 4.97 $32.98 million $0.12 155.42
Intercontinental Exchange $5.96 billion 7.31 $1.42 billion $2.75 27.08

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

Analyst Ratings

This is a breakdown of current recommendations and price targets for Virtu Financial and Intercontinental Exchange, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Virtu Financial 1 4 1 0 2.00
Intercontinental Exchange 0 2 6 0 2.75

Virtu Financial currently has a consensus target price of $16.67, indicating a potential downside of 10.63%. Intercontinental Exchange has a consensus target price of $74.50, indicating a potential upside of 0.05%. Given Intercontinental Exchange’s stronger consensus rating and higher possible upside, analysts clearly believe Intercontinental Exchange is more favorable than Virtu Financial.

Institutional and Insider Ownership

26.6% of Virtu Financial shares are owned by institutional investors. Comparatively, 90.0% of Intercontinental Exchange shares are owned by institutional investors. 69.9% of Virtu Financial shares are owned by company insiders. Comparatively, 1.5% of Intercontinental Exchange shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Dividends

Virtu Financial pays an annual dividend of $0.96 per share and has a dividend yield of 5.1%. Intercontinental Exchange pays an annual dividend of $0.80 per share and has a dividend yield of 1.1%. Virtu Financial pays out 800.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Intercontinental Exchange pays out 29.1% of its earnings in the form of a dividend. Virtu Financial has increased its dividend for 4 consecutive years. Virtu Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Intercontinental Exchange beats Virtu Financial on 11 of the 16 factors compared between the two stocks.

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.

About Intercontinental Exchange

Intercontinental Exchange Inc, formerly IntercontinentalExchange Group, Inc., is a network of regulated exchanges and clearing houses for financial and commodity markets. The Company delivers transparent and accessible data, technology and risk management services to markets around the world through its portfolio of exchanges, including the New York Stock Exchange, ICE Futures, Liffe and Euronext. In February 2014, the Company completed the acquisition of Singapore Mercantile Exchange. In July 2014, Intercontinental Exchange Inc sold its Wombat Financial Software, a unit of NYSE Technologies. Effective September 10, 2014, Intercontinental Exchange Inc acquired an undisclosed majority interest in Holland Clearing House NV.

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