Virtu Financial (NASDAQ: VIRT) and CME Group (NASDAQ:CME) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, dividends, valuation, profitabiliy, institutional ownership, risk and analyst recommendations.

Risk & Volatility

Virtu Financial has a beta of 0.42, indicating that its share price is 58% less volatile than the S&P 500. Comparatively, CME Group has a beta of 0.74, indicating that its share price is 26% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Virtu Financial and CME Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Virtu Financial 2 0 0 0 1.00
CME Group 0 3 4 0 2.57

Virtu Financial currently has a consensus target price of $14.50, indicating a potential downside of 10.77%. CME Group has a consensus target price of $126.71, indicating a potential upside of 5.45%. Given CME Group’s stronger consensus rating and higher probable upside, analysts plainly believe CME Group is more favorable than Virtu Financial.

Dividends

Virtu Financial pays an annual dividend of $0.96 per share and has a dividend yield of 5.9%. CME Group pays an annual dividend of $2.64 per share and has a dividend yield of 2.2%. Virtu Financial pays out 133.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. CME Group pays out 57.1% of its earnings in the form of a dividend.

Institutional & Insider Ownership

90.6% of Virtu Financial shares are owned by institutional investors. Comparatively, 83.1% of CME Group shares are owned by institutional investors. 69.9% of Virtu Financial shares are owned by company insiders. Comparatively, 0.6% of CME Group shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Virtu Financial and CME Group’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Virtu Financial $567.89 million 1.16 $29.28 million $0.72 22.57
CME Group $3.59 billion 11.37 $2.45 billion $4.62 26.01

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

Profitability

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

Net Margins Return on Equity Return on Assets
Virtu Financial 4.41% 20.72% 2.79%
CME Group 43.62% 7.43% 2.24%

Summary

CME Group beats Virtu Financial on 11 of the 16 factors compared between the two stocks.

Virtu Financial Company Profile

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.

CME Group Company Profile

CME Group Inc., through its exchanges, provides products across all asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural products and metals. The Company’s segment primarily consists of the Chicago Mercantile Exchange Inc. (CME), Board of Trade of the City of Chicago, Inc. (CBOT), New York Mercantile Exchange, Inc. (NYMEX) and Commodity Exchange, Inc. (COMEX) exchanges. The Company provides electronic trading around the globe on its CME Globex platform. The Company also offers clearing and settlement services across asset classes for exchange-traded and over-the-counter derivatives through its clearinghouses CME Clearing and CME Clearing Europe. It also provides hosting, connectivity and customer support for electronic trading through its co-location services. The Company’s CME Direct platform offers side-by-side trading of exchange-listed and privately negotiated markets.

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