Comparing Moody’s (NYSE:MCO) and Virtu Financial (NYSE:VIRT)
by Mitch Edgeman · The Markets DailyVirtu Financial (NYSE:VIRT – Get Free Report) and Moody’s (NYSE:MCO – Get Free Report) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their dividends, earnings, profitability, institutional ownership, risk, valuation and analyst recommendations.
Profitability
This table compares Virtu Financial and Moody’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% |
| Moody’s | 34.25% | 80.35% | 19.38% |
Valuation & Earnings
This table compares Virtu Financial and Moody’s”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Virtu Financial | $3.63 billion | 2.47 | $468.36 million | $6.02 | 9.61 |
| Moody’s | $7.72 billion | 10.51 | $2.46 billion | $15.77 | 29.70 |
Moody’s has higher revenue and earnings than Virtu Financial. Virtu Financial is trading at a lower price-to-earnings ratio than Moody’s, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
Virtu Financial has a beta of 0.62, meaning that its stock price is 38% less volatile than the S&P 500. Comparatively, Moody’s has a beta of 1.34, meaning that its stock price is 34% more volatile than the S&P 500.
Dividends
Virtu Financial pays an annual dividend of $0.96 per share and has a dividend yield of 1.7%. Moody’s pays an annual dividend of $4.12 per share and has a dividend yield of 0.9%. Virtu Financial pays out 15.9% of its earnings in the form of a dividend. Moody’s pays out 26.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Moody’s has raised its dividend for 16 consecutive years. Virtu Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.
Insider & Institutional Ownership
45.8% of Virtu Financial shares are held by institutional investors. Comparatively, 92.1% of Moody’s shares are held by institutional investors. 46.8% of Virtu Financial shares are held by insiders. Comparatively, 0.1% of Moody’s shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Analyst Recommendations
This is a breakdown of recent ratings and target prices for Virtu Financial and Moody’s, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Virtu Financial | 1 | 2 | 3 | 1 | 2.57 |
| Moody’s | 0 | 5 | 14 | 1 | 2.80 |
Virtu Financial presently has a consensus target price of $58.80, indicating a potential upside of 1.61%. Moody’s has a consensus target price of $553.61, indicating a potential upside of 18.19%. Given Moody’s’ stronger consensus rating and higher probable upside, analysts clearly believe Moody’s is more favorable than Virtu Financial.
Summary
Moody’s beats Virtu Financial on 14 of the 17 factors compared between the two stocks.
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 Moody’s
Moody’s Corporation operates as an integrated risk assessment firm worldwide. It operates in two segments, Moody’s Analytics and Moody’s Investors Services. The Moody’s Analytics segment develops a range of products and services that support the risk management activities of institutional participants in financial markets. It also offers credit research, credit models and analytics, economics data and models, and structured finance solutions; data sets on companies and securities; and SaaS solutions supporting banking, insurance, and know your customer workflows. The Moody’s Investors Service segment publishes credit ratings and provides assessment services on various debt obligations, programs and facilities, and entities that issue such obligations, such as various corporate, financial institution, and governmental obligations, as well as structured finance securities. The company was formerly known as Dun and Bradstreet Company and changed its name to Moody’s Corporation in September 2000. Moody’s Corporation was founded in 1900 and is headquartered in New York, New York.