Yahoo Finance Why Is Verisk (VRSK) Up 8.5% Since Last Earnings Report?
A month has gone by since the last earnings report for Verisk Analytics (VRSK). Shares have added about 8.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Verisk due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Verisk's Q3 Earnings Match Estimates
Verisk Analytics reported mixed third-quarter 2022 results, wherein earnings met the Zacks Consensus Estimate but revenues missed the same.
Adjusted earnings per share (excluding 26 cents from non-recurring items) of $1.46 meet the consensus mark but grew 1.4% on a year-over-year basis. The upside was backed by growth in the Insurance segment and a lower average share count.
Revenues of $745.3 million missed the consensus estimate by 1.6% and decreased 1.8% year over year on a reported basis but increased 4.8% on an organic constant-currency (cc) basis. The revenue decline was primarily due to the sale of the environmental health and safety business (3E), and Verisk Financial Services.
Segmental Performance
The Insurance segment’s revenues totaled $610.1 million, up 9.4% year over year on a reported basis and 5.3% on an organic cc basis.
Within the segment, underwriting and rating revenues of $436.2 million rose 11.7% on a reported basis and 6.5% on an organic cc basis. The upside was primarily driven by an annual increase in prices derived from the continued enhancements of the content of solutions within the industry-standard insurance programs and the sale of expanded solutions to the existing customers in commercial and personal lines. In addition, extreme event and life solutions contributed to growth.
Claims revenues amounted to $173.9 million, improving 3.9% on a reported basis and 2.4% on an organic cc basis. The top line was primarily driven by growth in claims analytics solutions and in repair cost estimation solutions.
The Energy and Specialized Markets segment’s revenues of $135.2 million decreased 18.5% year over year on a reported basis but increased 2.5% on an organic cc basis. The fall in revenues was primarily due to the sale of the 3E business that closed on Mar 11, 2022, and the suspension of commercial operations in Russia. However, organic cc growth was driven by modest growth in research revenues.
Operating Results
Adjusted EBITDA of $383.5 million increased 1.2% on a reported basis and 6% on an organic cc basis. Adjusted EBITDA margin rose to 51.5% from 49.9% in the prior-year quarter.
Balance Sheet and Cash Flow
Verisk exited third-quarter 2022 with cash and cash equivalents of $276.8 million compared with $480.7 million at the end of the prior-year quarter. Long-term debt was $2.34 billion, flat with the prior-year quarter’s level. Verisk generated $280.2 million of cash from operating activities, while capex was $65.8 million. Free cash flow was $214.4 million.
Share Repurchase & Dividend Payout
During the quarter, Verisk paid out a total cash dividend of $48.6 million. It bought back 1.6 million shares at an average price of $187.08 for a total cost of $300 million. As of Sep 30, 2022, VRSK had $407.5 million remaining under its share repurchase authorization.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -19.96% due to these changes.
VGM Scores
Currently, Verisk has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Verisk has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Verisk belongs to the Zacks Business - Information Services industry. Another stock from the same industry, S&P Global (SPGI), has gained 13.5% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
S&P Global reported revenues of $2.86 billion in the last reported quarter, representing a year-over-year change of +37.1%. EPS of $2.93 for the same period compares with $3.54 a year ago.
For the current quarter, S&P Global is expected to post earnings of $2.52 per share, indicating a change of -20% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.1% over the last 30 days.
S&P Global has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.
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Verisk Analytics, Inc. (VRSK) : Free Stock Analysis Report
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