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Verisk (VRSK) Poised for Long-Term Growth Despite Risks
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On Mar 2, we initiated a research report on business services provider Verisk Analytics, Inc. (VRSK - Free Report) .
Headquartered in Jersey City, NJ, Verisk offers data analytics services to diverse industries such as insurance, natural resources, healthcare, financial services, government and risk management. Using advanced technologies to collect and analyze troves of data, Verisk draws on unique data assets and deep domain expertise to provide predictive analytics and decision support solutions that are integrated into customer workflows. This helps its customers make informed decisions with greater precision, efficiency and discipline about various risks involved in the businesses. In order to create long-term value for its clients, the company has extended its scalable data and analytic solutions by steadily putting resources into overseas markets. The scalability of its products has further led to highly cash-generative businesses characterized by high net margins and relatively low capital intensity.
Verisk aims to create long-term value through organic growth and better return on invested capital. The company continuously seeks to expand its portfolio by leveraging its deep knowledge and embedded position to develop new, proprietary data sets and predictive analytics by working in unison with its customers to understand their evolving needs. Verisk recorded an average organic revenue growth of about 8% over the past 10 years. At the same time, it continues to extend its footprint in new markets, with healthy long-term growth potential, through targeted international expansion. This holistic growth model is likely to strengthen its leading position in the market.
Verisk offers advanced technologies to capture and interpret imagery, telemetry data, sensory data and other emergent data sets in real time and at scale. At the same time, it provides visualization and consumability with emphasis on geo-location to predict weather patterns in advance. Multivariate regression trees and algorithms to estimate event likelihood and cohort belonging along with simulated Monte Carlo experiments for highly coupled nonlinear systems with wide variability and high underlying betas remain its forte. Such a deep technical prowess for analytics and Big Data provide an unrivalled edge over its competitors.
However, the company generates a significant portion of its revenues from the U.S. P&C (property & casualty) insurers (approximately 48.9% of total revenue in 2016). The insurance industry is likely to struggle for top- and bottom-line growth with evolving rules and regulations. Challenging organic growth prospects are likely to force the industry to seek cost-cutting measures and newer avenues for growth. This could lead to lower revenue generation for Verisk in the future quarters.
In addition, a significant portion of the company’s revenues is generated from operations outside the U.S. With modest revenues coming from the U.K., Verisk is likely to be stifled by the renegotiated deals and restrictions imposed on trade with other European Union members. Brexit could further result in higher tariff and non-tariff barriers to trade between the U.K. and the European Union, lowering productivity of the company. These undermine the long-term growth potential of the company to some extent.
Nevertheless, Verisk appears poised for healthy long-term growth despite stiff competition from peers such as IHS Markit Ltd. , National Research Corporation and TransUnion (TRU - Free Report) .
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Verisk (VRSK) Poised for Long-Term Growth Despite Risks
On Mar 2, we initiated a research report on business services provider Verisk Analytics, Inc. (VRSK - Free Report) .
Headquartered in Jersey City, NJ, Verisk offers data analytics services to diverse industries such as insurance, natural resources, healthcare, financial services, government and risk management. Using advanced technologies to collect and analyze troves of data, Verisk draws on unique data assets and deep domain expertise to provide predictive analytics and decision support solutions that are integrated into customer workflows. This helps its customers make informed decisions with greater precision, efficiency and discipline about various risks involved in the businesses. In order to create long-term value for its clients, the company has extended its scalable data and analytic solutions by steadily putting resources into overseas markets. The scalability of its products has further led to highly cash-generative businesses characterized by high net margins and relatively low capital intensity.
Verisk aims to create long-term value through organic growth and better return on invested capital. The company continuously seeks to expand its portfolio by leveraging its deep knowledge and embedded position to develop new, proprietary data sets and predictive analytics by working in unison with its customers to understand their evolving needs. Verisk recorded an average organic revenue growth of about 8% over the past 10 years. At the same time, it continues to extend its footprint in new markets, with healthy long-term growth potential, through targeted international expansion. This holistic growth model is likely to strengthen its leading position in the market.
Verisk offers advanced technologies to capture and interpret imagery, telemetry data, sensory data and other emergent data sets in real time and at scale. At the same time, it provides visualization and consumability with emphasis on geo-location to predict weather patterns in advance. Multivariate regression trees and algorithms to estimate event likelihood and cohort belonging along with simulated Monte Carlo experiments for highly coupled nonlinear systems with wide variability and high underlying betas remain its forte. Such a deep technical prowess for analytics and Big Data provide an unrivalled edge over its competitors.
However, the company generates a significant portion of its revenues from the U.S. P&C (property & casualty) insurers (approximately 48.9% of total revenue in 2016). The insurance industry is likely to struggle for top- and bottom-line growth with evolving rules and regulations. Challenging organic growth prospects are likely to force the industry to seek cost-cutting measures and newer avenues for growth. This could lead to lower revenue generation for Verisk in the future quarters.
In addition, a significant portion of the company’s revenues is generated from operations outside the U.S. With modest revenues coming from the U.K., Verisk is likely to be stifled by the renegotiated deals and restrictions imposed on trade with other European Union members. Brexit could further result in higher tariff and non-tariff barriers to trade between the U.K. and the European Union, lowering productivity of the company. These undermine the long-term growth potential of the company to some extent.
Nevertheless, Verisk appears poised for healthy long-term growth despite stiff competition from peers such as IHS Markit Ltd. , National Research Corporation and TransUnion (TRU - Free Report) .
5 Trades Could Profit "Big-League" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure. See these buy recommendations now >>