VIRT or BX: Which Is the Better Value Stock Right Now?

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company to watch right now is Virtu Financial (VIRT). VIRT is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock has a Forward P/E ratio of 10.91. This compares to its industry's average Forward P/E of 15.88. Over the past year, VIRT's Forward P/E has been as high as 11.49 and as low as 7.05, with a median of 9.31.

Investors will also notice that VIRT has a PEG ratio of 0.46. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. VIRT's PEG compares to its industry's average PEG of 0.77. Over the past 52 weeks, VIRT's PEG has been as high as 5.04 and as low as 0.36, with a median of 0.43.

Finally, investors should note that VIRT has a P/CF ratio of 8.55. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 16.62. VIRT's P/CF has been as high as 8.55 and as low as 5.18, with a median of 6.73, all within the past year.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Virtu Financial is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, VIRT feels like a great value stock at the moment.

Zacks Investment Research

Financial stocks were lower in late Thursday afternoon trading, with the NYSE Financial Index shedding 0.7% and the Financial Select Sector SPDR Fund (XLF) falling 1.4%.

The Philadelphia Housing Index was rising 1.1%, and the Real Estate Select Sector SPDR Fund (XLRE) was adding 1.4%.

Bitcoin (BTC/USD) was gaining 1.2% to $76,655, and the yield for 10-year US Treasuries was dropping 8.9 basis points to 4.34%.

In economic news, the Federal Reserve's monetary policy committee on Thursday reduced its benchmark lending rate by 25 basis points, following a 50-basis-point cut in September. The Federal Open Market Committee reduced interest rates to a range of 4.50% to 4.75% from 4.75% to 5%, in line with a Bloomberg-compiled consensus.

The seasonally adjusted number of initial claims rose by 3,000 to 221,000 in the week ended Saturday, according to the Department of Labor. The consensus was for 222,000 in a survey of analysts compiled by Bloomberg.

In corporate news, CME Group said Thursday its board will extend the contract of Chair and Chief Executive Terry Duffy through the end of 2026. Its shares added 0.6%.

Allstate is expected to grow its auto policy-in-force by about 3.8% year-over-year in 2025 and around 2% in 2026 due to improved retention rates and an increase in new policies, Morgan Stanley said in a note Thursday. The firm said Allstate is now one of its top picks, while reiterating an overweight rating on the stock and raising its price target to $228 from $220. Allstate shares rose 1.2%.

Banco Santander said in a regulatory filing Wednesday that its US markets unit is cooperating with the US Securities and Exchange Commission in regard to an inquiry into the use of unauthorized messaging platforms. The bank's shares were rising 1.5%.

Blackstone is among the suitors showing interest in potentially taking over Ayvens, the French car-leasing business controlled by Societe Generale, Bloomberg reported. Blackstone shares were down 0.3%.

Investors might want to bet on Virtu Financial (VIRT), as earnings estimates for this company have been showing solid improvement lately. The stock has already gained solid short-term price momentum, and this trend might continue with its still improving earnings outlook.

Analysts' growing optimism on the earnings prospects of this high-speed trading company is driving estimates higher, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- has this insight at its core.

The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.

For Virtu Financial, strong agreement among the covering analysts in revising earnings estimates upward has resulted in meaningful improvement in consensus estimates for the next quarter and full year.

Current-Quarter Estimate Revisions

The company is expected to earn $0.73 per share for the current quarter, which represents a year-over-year change of +170.37%.

Over the last 30 days, three estimates have moved higher for Virtu Financial compared to no negative revisions. As a result, the Zacks Consensus Estimate has increased 15.23%.

Current-Year Estimate Revisions

The company is expected to earn $3.15 per share for the full year, which represents a change of +71.2% from the prior-year number.

The revisions trend for the current year also appears quite promising for Virtu Financial, with three estimates moving higher over the past month compared to one negative revision. The consensus estimate has also received a boost over this time frame, increasing 9.12%.

Favorable Zacks Rank

Thanks to promising estimate revisions, Virtu Financial currently carries a Zacks Rank #1 (Strong Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.

Bottom Line

While strong estimate revisions for Virtu Financial have attracted decent investments and pushed the stock 5.1% higher over the past four weeks, further upside may still be left in the stock. So, you may consider adding it to your portfolio right away.

Zacks Investment Research

For Immediate Release

Chicago, IL – November 7, 2024 – Stocks in this week’s article are Alibaba Group BABA, Pfizer PFE, Virtu Financial VIRT, Leidos LDOS and Brinker International EAT.

5 PEG-Based GARP Stocks to Buy Amid Election-Week Volatility

Just as the presidential election results are unfolding, investors are certain about one particular thing — a probable increase in volatility in the equity space in the course of the week. At the time of publishing this article, Trump's return to the White House has been confirmed although not officially declared yet.

Be that as it may, considering the diverse focus and agenda of the parties, conditional to the final/official voting outcome, a number of sectors are bound to see growth compared to others. While there is still time for investors to clearly understand which sectors to put more money in and which sectors to exit, it will be a prudent idea now to follow a hybrid investment strategy to minimize the risk of this external volatility.

Here, to find an answer, we resort to the investing track of the Oracle of Omaha, where he has shown a gradual shift from being a pure-play value investor to a GARP (growth at a reasonable price) investor.

Several stocks, which have surged significantly in the recent past, show an overwhelming success of this hybrid investing strategy over pure-play value and growth investments. Here, we will discuss the success of five such stocks. These are Alibaba Group, Pfizer, Virtu Financial, Leidos and Brinker International.

More on GARP

The GARP theory enables strategic mingling of growth and value-investing principles, which gives us a hybrid strategy by utilizing the best features of both. What GARPers look for is whether or not the stocks are somewhat undervalued and have solid sustainable growth potential (Investopedia).

PEG Ratio and GARP

GARP investing gives priority to one of the popular value metrics — the price/earnings growth (PEG) ratio. Although it is categorized under value investing, this strategy follows the principles of both growth and value investing.

The PEG ratio is defined as: (Price/ Earnings)/Earnings Growth Rate

It relates stocks' P/E ratio with their future earnings growth rates.

While P/E alone gives an idea of stocks trading at a discount, PEG, by adding the growth element, helps identify stocks with solid future potential.

A lower PEG ratio, preferably less than 1, is always better for GARP investors.

Say for example, if a stock's P/E ratio is 10 and the expected long-term growth rate is 15%, the company's PEG will come down to 0.66, a ratio indicating both undervaluation and future growth potential.

Unfortunately, this ratio is often neglected due to investors' limitations in calculating the future earnings growth rate of a stock.

There are some drawbacks to using the PEG ratio, though. It does not consider the very common situation of changing growth rates, such as the forecast of the first three years at a very high growth rate, followed by a sustainable but lower growth rate over the long term.

Hence, PEG-based investing can be even more rewarding if some other relevant parameters are also taken into consideration.

Our Picks

Here are five out of the 14 stocks that qualified the screening:

Alibaba: It is one of the leading e-commerce giants in China. Over the last few years, the company has transformed itself from being a traditional e-commerce company to a conglomerate that has businesses ranging from logistics and food delivery to cloud computing. Alibaba is benefiting from strong momentum in its international commerce retail business, driven by strength in AliExpress' Choice.

BABA can be an impressive value investment pick with its Zacks Rank #1 and a Value Score of A. Apart from a discounted PEG and P/E, the stock has an impressive long-term expected growth rate of 26.5%.

You can see the complete list of today's Zacks #1 Rank stocks here.

Pfizer: The company has a wide range of drugs and vaccines. Pfizer's Biopharma reporting segment includes three broad therapeutic areas, Primary Care, Specialty Care and Oncology. Pfizer's non-COVID operational revenues are improving fast, driven by its key in-line products like Prevnar, Vyndaqel and Eliquis, new launches, and newly acquired products, including those from Seagen.

Pfizer stock can also be an impressive value investment pick with its Zacks Rank #2 and Value Score of A. Apart from a discounted PEG and P/E, PFE has a solid long-term expected growth rate of 10.7%.

Virtu Financial: The company is a market-leading financial services firm that leverages cutting-edge technology to provide execution services and data, analytics and connectivity products to its clients and deliver liquidity to the global markets. Virtu Financial provides a wide array of offerings in execution, liquidity sourcing, analytics and broker-neutral, and multi-dealer platforms in workflow technology.

VIRT has an impressive growth rate of 23.6% for the next five years. The stock currently has a Value Score of A and carries a Zacks Rank #1.

Leidos: It is a global science and technology leader serving the defense, intelligence, civil and health markets. Its core capabilities include providing solutions in the fields of cybersecurity; data analytics; enterprise IT modernization and so on. Leidos' defense solutions continue to witness increased contract wins from the Pentagon and other U.S. allies, which led to a solid backlog of $40.56 billion at the end of September 2024.

LDOS stock can be an impressive value investment pick with its Zacks Rank #1 and a Value Score of B. Apart from a discounted PEG and P/E, Leidos also has an impressive long-term expected growth rate of 12.5%.

Brinker: The company owns, operates, develops and franchises various restaurants under Chili's Grill & Bar and Maggiano's Little Italy brands. Brinker remains steadfast in its goal to drive traffic and revenues through sales-building initiatives such as a streamlined menu and innovation, improved value proposition, better food presentation, advertising campaigns, kitchen system optimization and introduction of an enhanced service platform.

Brinker can also be an impressive value investment pick with its Zacks Rank #1 and a Value Score of B. Apart from a discounted PEG and P/E, the stock also has a solid long-term expected growth rate of 16.4%.

You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.

The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.

Click here to sign up for a free trial to the Research Wizard today.

For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2365327/5-peg-based-garp-stocks-to-buy-amid-election-week-volatility

Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

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Zacks Investment Research

Financial stocks surged in late Wednesday afternoon trading with the NYSE Financial Index jumping 4.1% and the Financial Select Sector SPDR Fund (XLF) soaring 6.2%.

The Philadelphia Housing Index fell 1.1%, and the Real Estate Select Sector SPDR Fund (XLRE) slumped 2.5%.

Bitcoin (BTC/USD) jumped 9.6% to $75,965, and the yield for 10-year US Treasuries surged 14 basis points to 4.43%.

In economic news, mortgage applications fell 11% in the week ended Friday as mortgage rates rose to the highest since July, according to the Mortgage Bankers Association.

In corporate news, the fees Visa and MasterCard charge retailers in the EU are under probe by the bloc's regulators to see if the costs are hurting businesses, Reuters reported. Visa shares gained 4.6% and Mastercard rose 2.9%.

Capital One Financial's planned acquisition of Discover Financial Services received a boost from Donald Trump's victory in the US presidential election, Bloomberg Intelligence said in a note. Capital One shares jumped 15% and Discover soared 20%.

Blackstone agreed to buy Retail Opportunity Investments for $4 billion in cash, or $17.50 a share. Blackstone shares rose 4.9%, and Retail Opportunity climbed 4.5%.

BlackRock is preparing a private credit loan fund to raise as much as $1.3 billion for possible distribution to existing investors, Bloomberg reported. BlackRock shares rose 1.9%.