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Verisk (VRSK) Beats Q3 Earnings on Healthy Organic Growth
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Verisk Analytics, Inc. (VRSK - Free Report) reported solid third-quarter 2016 results with adjusted earnings from continuing operations of 84 cents per share, compared with 78 cents in the year-ago quarter. Adjusted earnings comfortably beat the Zacks Consensus Estimate of 75 cents. The improvement in adjusted earnings was due to solid operations, lower interest expense, and a lower tax rate, partially offset by high depreciation and amortization expense.
Net income from continuing operations in the reported quarter was $127.6 million or 74 cents per share compared with $124.2 million or 73 cents per share in the prior-year quarter. The year-over-year increase in earnings was primarily attributable to healthy top-line growth.
Total revenues increased to $498.1 million from $470.4 million in the prior-year period due to solid organic growth and were in sync with the Zacks Consensus Estimate. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) from continuing operations decreased 0.6% year over year to $253.3 million
Decision Analytics segment’s revenues from continuing operations increased 6.2% to $317.3 million and accounted for 63.7% of total revenues. Energy and specialized markets category revenues declined marginally to $109.1 million. Insurance category revenues increased 7.4% to $174.4 million, while financial services category revenues were up 24.5% to $33.8 million, driven by analytical solutions and media effectiveness.
Risk Assessment segment’s revenues grew 5.3% to $180.8 million, accounting for 36.3% of total revenues. Property-specific rating and underwriting information revenues grew 4.8% to $42.6 million, driven by an increase in commercial underwriting solutions subscription revenues. Industry-standard insurance programs revenues were up 5.4% to $138.2 million, primarily attributable to growth in new solutions.
Balance Sheet and Cash Flow
At the quarter end, Verisk had about $164.8 million in cash and cash equivalents with long-term debt of $2,279.4 million. Net cash generated from operating activities for the first nine months of the year was $463.7 million compared with $520.0 million in the prior-year period, resulting in respective free cash flows of $354.3 million and $380.3 million.
Verisk repurchased 0.9 million shares for $73 million during the quarter. At the quarter end, the company had $280 million worth of shares remaining under its share repurchase authorization.
Moving Forward
Verisk continues to deliver outstanding data analytics solutions to its customers across its core verticals of insurance, natural resources, and financial services. The company’s ability to generate strong cash enables it to meet its deleveraging objectives and helps it invest on behalf of its shareholders.
CRA International has a long-term earnings growth expectation of 8% and is currently trading at a forward P/E of 23.9x.
S&P Global has a long-term earnings growth expectation of 12.4% and is currently trading at a forward P/E of 23.3x.
TransUnion has a long-term earnings growth expectation of 12.8% and is currently trading at a forward P/E of 23.8x.
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Verisk (VRSK) Beats Q3 Earnings on Healthy Organic Growth
Verisk Analytics, Inc. (VRSK - Free Report) reported solid third-quarter 2016 results with adjusted earnings from continuing operations of 84 cents per share, compared with 78 cents in the year-ago quarter. Adjusted earnings comfortably beat the Zacks Consensus Estimate of 75 cents. The improvement in adjusted earnings was due to solid operations, lower interest expense, and a lower tax rate, partially offset by high depreciation and amortization expense.
Net income from continuing operations in the reported quarter was $127.6 million or 74 cents per share compared with $124.2 million or 73 cents per share in the prior-year quarter. The year-over-year increase in earnings was primarily attributable to healthy top-line growth.
Total revenues increased to $498.1 million from $470.4 million in the prior-year period due to solid organic growth and were in sync with the Zacks Consensus Estimate. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) from continuing operations decreased 0.6% year over year to $253.3 million
VERISK ANALYTIC Price, Consensus and EPS Surprise
VERISK ANALYTIC Price, Consensus and EPS Surprise | VERISK ANALYTIC Quote
Segment Performance
Decision Analytics segment’s revenues from continuing operations increased 6.2% to $317.3 million and accounted for 63.7% of total revenues. Energy and specialized markets category revenues declined marginally to $109.1 million. Insurance category revenues increased 7.4% to $174.4 million, while financial services category revenues were up 24.5% to $33.8 million, driven by analytical solutions and media effectiveness.
Risk Assessment segment’s revenues grew 5.3% to $180.8 million, accounting for 36.3% of total revenues. Property-specific rating and underwriting information revenues grew 4.8% to $42.6 million, driven by an increase in commercial underwriting solutions subscription revenues. Industry-standard insurance programs revenues were up 5.4% to $138.2 million, primarily attributable to growth in new solutions.
Balance Sheet and Cash Flow
At the quarter end, Verisk had about $164.8 million in cash and cash equivalents with long-term debt of $2,279.4 million. Net cash generated from operating activities for the first nine months of the year was $463.7 million compared with $520.0 million in the prior-year period, resulting in respective free cash flows of $354.3 million and $380.3 million.
Verisk repurchased 0.9 million shares for $73 million during the quarter. At the quarter end, the company had $280 million worth of shares remaining under its share repurchase authorization.
Moving Forward
Verisk continues to deliver outstanding data analytics solutions to its customers across its core verticals of insurance, natural resources, and financial services. The company’s ability to generate strong cash enables it to meet its deleveraging objectives and helps it invest on behalf of its shareholders.
Verisk currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include CRA International Inc. (CRAI - Free Report) , S&P Global, Inc. (SPGI - Free Report) and TransUnion (TRU - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CRA International has a long-term earnings growth expectation of 8% and is currently trading at a forward P/E of 23.9x.
S&P Global has a long-term earnings growth expectation of 12.4% and is currently trading at a forward P/E of 23.3x.
TransUnion has a long-term earnings growth expectation of 12.8% and is currently trading at a forward P/E of 23.8x.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>