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Verisk (VRSK) Beats Q4 Earnings Estimates on Holistic Growth
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Verisk Analytics, Inc. (VRSK - Free Report) reported solid fourth-quarter 2016 results with adjusted earnings from continuing operations of 80 cents per share, up from 74 cents in the year-ago quarter. Adjusted earnings comfortably beat the Zacks Consensus Estimate of 77 cents. The improvement in adjusted earnings was primarily driven by healthy organic and inorganic growth and lower interest expenses, partially offset by high depreciation and taxes.
Net income from continuing operations remained relatively flat at $107.5 million or 63 cents per share compared with $108.0 million or 63 cents per share in the prior-year quarter. For full-year 2016, GAAP income from continuing operations was $451.5 million or $2.64 per share compared with $487.5 million or $2.89 per share in 2015. Adjusted earnings from continuing operations in 2016 improved 8.4% year over year to $3.11 per share.
Total revenue for the reported quarter increased to $506.1 million from $477.4 million in the prior-year period due to solid organic growth, but marginally missed the Zacks Consensus Estimate of $507 million. For the full year, revenues were $1,995.2 million compared with $1,760.7 million in 2015. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) from continuing operations for the quarter increased 7% year over year to $257.8 million
Segmental Performance
Decision Analytics segment’s revenues from continuing operations increased 6.5% to $323.5 million and accounted for 63.9% of total revenue. Energy and Specialized Markets category revenues declined marginally to $109.7 million. Insurance category revenues increased 7.5% to $178.3 million on solid underwriting solutions growth. Financial Services category revenues were up 27.3% year over year to $35.5 million, driven by analytical and media effectiveness solutions.
Risk Assessment segment’s revenues grew 5.1% to $182.6 million, accounting for 36.1% of total revenue. Property-specific rating and underwriting information revenues grew 2.6% to $42.7 million, driven by an increase in underwriting solutions subscription revenues. Industry-standard insurance programs revenues were up 5.9% to $139.9 million, primarily attributable to growth in new solutions.
Acquisitions
During the quarter, Verisk acquired The GeoInformation Group, a premier provider of geographic data solutions, for an undisclosed amount. GeoInformation leverages on high-resolution aerial imagery to obtain accurate and in-depth geospatial data for key public sector entities. The strategic transaction will fortify Verisk’s footprint in the U.K. and cement its position as a premier data and analytics services provider across multiple markets, including insurance, energy, and real estate. At the same time, GeoInformation's complementary product portfolio will supplement Verisk’s risk management and predictive analytics capabilities across the globe.
The company also acquired MarketStance, a primary provider of market intelligence and analytics services in the insurance industry. The transaction will fortify Verisk’s foothold in the insurance industry by leveraging MarketStance’s proprietary analytics model to provide actionable insights.
Subsequent to the end of the quarter, Verisk purchased Arium, a liability risk modeling and decision support firm, for an undisclosed amount. Formed in 1998, Arium or Architects for Risk Identification, Understanding, and Management specializes in developing risk models, mainly for the reinsurance industry. The company uses a unique methodology based on dependency theory. Its casualty analytics platform enables other companies to run historical and emerging scenarios and build their own scenarios across all casualty lines. Incorporating Arium’s methodologies will enable Verisk’s clients to comprehensively manage risks across their portfolios in the casualty market. We expect the acquisitions to be accretive for the company in the near future.
Verisk Analytics, Inc. Price, Consensus and EPS Surprise
At year-end 2016, Verisk had about $135.1 million in cash and cash equivalents with long-term debt of $2,280.2 million compared with the respective tallies of $138.3 million and $2,270.9 million in the year-ago period. Net cash generated from operating activities in 2016 was $546.1 million compared with $623.7 million in 2015, resulting in respective free cash flows of $378.8 million and $411.8 million.
Verisk repurchased 1.8 million shares for $144 million during the quarter. At the year end, the company had $636 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.
IHS Markit has a long-term earnings growth expectation of 13.5% and is currently trading at a forward P/E of 24.0x.
S&P Global has a long-term earnings growth expectation of 12.3% and is currently trading at a forward P/E of 21.7x.
TransUnion has a long-term earnings growth expectation of 12.8% and is currently trading at a forward P/E of 23.0x.
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Verisk (VRSK) Beats Q4 Earnings Estimates on Holistic Growth
Verisk Analytics, Inc. (VRSK - Free Report) reported solid fourth-quarter 2016 results with adjusted earnings from continuing operations of 80 cents per share, up from 74 cents in the year-ago quarter. Adjusted earnings comfortably beat the Zacks Consensus Estimate of 77 cents. The improvement in adjusted earnings was primarily driven by healthy organic and inorganic growth and lower interest expenses, partially offset by high depreciation and taxes.
Net income from continuing operations remained relatively flat at $107.5 million or 63 cents per share compared with $108.0 million or 63 cents per share in the prior-year quarter. For full-year 2016, GAAP income from continuing operations was $451.5 million or $2.64 per share compared with $487.5 million or $2.89 per share in 2015. Adjusted earnings from continuing operations in 2016 improved 8.4% year over year to $3.11 per share.
Total revenue for the reported quarter increased to $506.1 million from $477.4 million in the prior-year period due to solid organic growth, but marginally missed the Zacks Consensus Estimate of $507 million. For the full year, revenues were $1,995.2 million compared with $1,760.7 million in 2015. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) from continuing operations for the quarter increased 7% year over year to $257.8 million
Segmental Performance
Decision Analytics segment’s revenues from continuing operations increased 6.5% to $323.5 million and accounted for 63.9% of total revenue. Energy and Specialized Markets category revenues declined marginally to $109.7 million. Insurance category revenues increased 7.5% to $178.3 million on solid underwriting solutions growth. Financial Services category revenues were up 27.3% year over year to $35.5 million, driven by analytical and media effectiveness solutions.
Risk Assessment segment’s revenues grew 5.1% to $182.6 million, accounting for 36.1% of total revenue. Property-specific rating and underwriting information revenues grew 2.6% to $42.7 million, driven by an increase in underwriting solutions subscription revenues. Industry-standard insurance programs revenues were up 5.9% to $139.9 million, primarily attributable to growth in new solutions.
Acquisitions
During the quarter, Verisk acquired The GeoInformation Group, a premier provider of geographic data solutions, for an undisclosed amount. GeoInformation leverages on high-resolution aerial imagery to obtain accurate and in-depth geospatial data for key public sector entities. The strategic transaction will fortify Verisk’s footprint in the U.K. and cement its position as a premier data and analytics services provider across multiple markets, including insurance, energy, and real estate. At the same time, GeoInformation's complementary product portfolio will supplement Verisk’s risk management and predictive analytics capabilities across the globe.
The company also acquired MarketStance, a primary provider of market intelligence and analytics services in the insurance industry. The transaction will fortify Verisk’s foothold in the insurance industry by leveraging MarketStance’s proprietary analytics model to provide actionable insights.
Subsequent to the end of the quarter, Verisk purchased Arium, a liability risk modeling and decision support firm, for an undisclosed amount. Formed in 1998, Arium or Architects for Risk Identification, Understanding, and Management specializes in developing risk models, mainly for the reinsurance industry. The company uses a unique methodology based on dependency theory. Its casualty analytics platform enables other companies to run historical and emerging scenarios and build their own scenarios across all casualty lines. Incorporating Arium’s methodologies will enable Verisk’s clients to comprehensively manage risks across their portfolios in the casualty market. We expect the acquisitions to be accretive for the company in the near future.
Verisk Analytics, Inc. Price, Consensus and EPS Surprise
Verisk Analytics, Inc. Price, Consensus and EPS Surprise | Verisk Analytics, Inc. Quote
Balance Sheet and Cash Flow
At year-end 2016, Verisk had about $135.1 million in cash and cash equivalents with long-term debt of $2,280.2 million compared with the respective tallies of $138.3 million and $2,270.9 million in the year-ago period. Net cash generated from operating activities in 2016 was $546.1 million compared with $623.7 million in 2015, resulting in respective free cash flows of $378.8 million and $411.8 million.
Verisk repurchased 1.8 million shares for $144 million during the quarter. At the year end, the company had $636 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 #2 (Buy). Some other favorably ranked stocks in the industry include IHS Markit Ltd. , S&P Global, Inc. (SPGI - Free Report) and TransUnion (TRU - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
IHS Markit has a long-term earnings growth expectation of 13.5% and is currently trading at a forward P/E of 24.0x.
S&P Global has a long-term earnings growth expectation of 12.3% and is currently trading at a forward P/E of 21.7x.
TransUnion has a long-term earnings growth expectation of 12.8% and is currently trading at a forward P/E of 23.0x.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>