Head to Head Review: Virtu Financial (NYSE:VIRT) & Moody’s (NYSE:MCO)

Moody’s (NYSE:MCO) and Virtu Financial (NYSE:VIRT) are both finance companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, analyst recommendations, valuation, dividends, risk, profitability and institutional ownership.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Moody’s	34.25%	80.35%	19.38%
Virtu Financial	13.50%	49.06%	4.28%

Dividends

Moody’s pays an annual dividend of $4.12 per share and has a dividend yield of 0.9%. Virtu Financial pays an annual dividend of $0.96 per share and has a dividend yield of 1.6%. Moody’s pays out 26.1% of its earnings in the form of a dividend. Virtu Financial pays out 15.9% 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 increased its dividend for 16 consecutive years. Virtu Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

Moody’s has a beta of 1.34, suggesting that its share price is 34% more volatile than the S&P 500. Comparatively, Virtu Financial has a beta of 0.62, suggesting that its share price is 38% less volatile than the S&P 500.

Earnings & Valuation

This table compares Moody’s and Virtu Financial”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Moody’s	$7.72 billion	10.66	$2.46 billion	$15.77	30.13
Virtu Financial	$3.63 billion	2.61	$468.36 million	$6.02	10.13

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.

Insider & Institutional Ownership

92.1% of Moody’s shares are held by institutional investors. Comparatively, 45.8% of Virtu Financial shares are held by institutional investors. 0.1% of Moody’s shares are held by company insiders. Comparatively, 46.8% of Virtu Financial shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings for Moody’s and Virtu Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Moody’s	0	5	14	1	2.80
Virtu Financial	1	2	3	1	2.57

Moody’s presently has a consensus target price of $553.61, indicating a potential upside of 16.52%. Virtu Financial has a consensus target price of $58.80, indicating a potential downside of 3.61%. Given Moody’s’ stronger consensus rating and higher possible upside, research 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 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.

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.