Virtu Financial, Inc. (NASDAQ:VIRT) and GAIN Capital Holdings, Inc. (NASDAQ:GCAP) are both Financial companies that recently hit new low. This price action has ruffled more than a few feathers in the investment community, but is one a better investment than the other? To answer this, we will compare the two companies across growth, profitability, risk, return, dividends, and valuation measures.
Virtu Financial, Inc. (NASDAQ:VIRT) operates in the Investment Brokerage – National segment of the Financial sector. The company has grown sales at a 8.80% annual rate over the past five years, putting it in the medium growth category. VIRT has a net profit margin of -0.30% and is less profitable than the average company in the Investment Brokerage – National industry. In terms of efficiency, VIRT has an asset turnover ratio of 0.15. This figure represents the amount of revenue a company generates per dollar of assets. VIRT’s financial leverage ratio is 5.92, which indicates that the company’s asset base is primarily funded by debt. Company’s return on equity, which is really just the product of the company’s profit margin, asset turnover, and financial leverage ratios, is -0.60%, which is worse than the Investment Brokerage – National industry average ROE.
Virtu Financial, Inc. (VIRT) pays out an annual dividend of 0.96 per share. At the current valuation, this equates to a dividend yield of 5.78%. The company has a payout ratio of 783.10%. VIRT’s current dividend therefore should be sustainable. Stock’s free cash flow yield, which represents the amount of cash available to investors before dividends, expressed as a percentage of the stock price, is -13.9. All else equal, companies with higher FCF yields are viewed as cheaper. Company trades at a P/E ratio of 134.96 , and is more expensive than the average stock in the Investment Brokerage – National industry. The average investment recommendation for VIRT, taken from a group of Wall Street Analysts, is 2.90, or a hold.
Over the past three months, Virtu Financial, Inc. insiders have been net buyers, dumping a net of 0 shares. This implies that insiders have been feeling relatively bearish about the outlook for VIRT. GAIN Capital Holdings, Inc. (NYSE:GCAP) operates in the Investment Brokerage – National segment of the Financial sector. GCAP has increased sales at a 17.70% CAGR over the past five years, and is considered a high growth stock. The company has a net profit margin of 4.10% and is more profitable than the average Investment Brokerage – National player. GCAP’s asset turnover ratio is 0.49 and the company has financial leverage of 3.95. GCAP’s return on equity of 5.10% is worse than the Investment Brokerage – National industry average.
GAIN Capital Holdings, Inc. (GCAP) pays a dividend of 0.24, which translates to dividend yield of 3.13% based on the current price. Stock has a payout ratio of 80.10%. According to this ratio, GCAP should be able to continue making payouts at these levels. The company trades at a free cash flow yield of 7.61 and has a P/E of 25.77. Compared to the average company in the 21.41 space, GCAP is relatively expensive. The average analyst recommendation for GCAP is 2.50, or a hold.
GAIN Capital Holdings, Inc. insiders have bought a net of 103,549 shares during the past three months, which implies that the company’s top executives have been feeling bullish about the stock’s outlook. Finally, GCAP’s beta of 0.28 indicates that the stock has an below average level of market risk.
Virtu Financial, Inc. (NYSE:GCAP) scores higher than GAIN Capital Holdings, Inc. (NASDAQ:VIRT) on 10 of the 13 measures compared between the two companies. GCAP has the better fundamentals, scoring higher on growth, profitability, efficiency, leverage and return metrics. GCAP wins on valuation measures. GCAP has better insider activity and sentiment signals.