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Verisk (VRSK) Beats Q3 Earnings on Healthy Top-Line Growth
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Data analytics services provider Verisk Analytics, Inc. (VRSK - Free Report) reported relatively modest third-quarter 2017 results with healthy year-over-year increase in revenues. Net income from continuing operations declined to $120.7 million from $127.6 million in the year-earlier quarter due to higher operating expenses. On a per share basis, net income from continuing operations decreased to 72 cents from 74 cents in the year-earlier quarter.
Adjusted earnings from continuing operations remained flat year over year at 84 cents per share and beat the Zacks Consensus Estimate by 6 cents.
Total revenues for the reported quarter improved 10.2% to $549.1 million due to modest organic growth from insurance business. Revenues exceeded the Zacks Consensus Estimate of $528 million. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) from continuing operations for the quarter improved 7.5% year over year to $272.3 million.
Verisk Analytics, Inc. Price, Consensus and EPS Surprise
Decision Analytics segment’s revenues increased 4.2% year over year to $355.9 million and accounted for 64.8% of total revenues. Revenues from Energy and Specialized Markets category improved 2.1% to $111.4 million as end markets of energy business stabilized. Insurance category revenues increased 16.9% to $203.9 million on solid performance by underwriting solutions, catastrophe modeling solutions and claims analytics. Financial Services category revenues were up at $40.6 million from $33.8 million in the prior-year period due to strong growth in product solutions.
Risk Assessment segment’s revenues grew 6.9% to $193.2 million, accounting for 35.2% of total revenues. Property-specific rating and underwriting information revenues improved 3.7% to $44.2 million, driven by higher subscription revenues and incremental contribution from newer solutions. Industry-standard insurance programs revenues were up 7.8% to $149 million, primarily attributable to growth in new solutions.
Acquisitions
During the quarter, Verisk acquired three firms to further augment its market presence. The company acquired LCI — a premier provider of risk insight, prediction, and management solutions for banks and creditors — to offer improved insights, proprietary decision-making algorithms and state-of-the-art risk management workflow solutions for banking clients. Verisk also acquired Sequel, a premier insurance and reinsurance software specialist based in London, for £250 million. The strategic buyout will enable Verisk to strengthen its footprint in the U.K. and further expand its comprehensive offerings to the global complex commercial and specialty insurance industry. Additionally, the company acquired G2 Web Services, an industry-leading provider of merchant risk intelligence solutions for acquirers, commercial banks, and other payment system providers, to help clients fight fraud, transaction laundering, and reputational risk within the global payments and e-commerce ecosystem. We expect the acquisitions to be accretive to its earnings in the near future.
Balance Sheet and Cash Flow
At the end of the quarter, Verisk had about $142 million in cash and cash equivalents with long-term debt of $2,278.8 million. Net cash generated from operating activities for the first nine months of 2017 was $592.1 million compared with $484.4 million in the prior-year period. Free cash flow from continuing operations for the first nine months of 2017 increased 27.5% year over year to $478 million.
Verisk repurchased 0.1 million shares during the quarter at an average price of $81.85 per share for $10 million. At the quarter end, the company had $366 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 deleveraging objectives and helps it invest on behalf of its shareholders.
TransUnion has a long-term earnings growth expectation of 10%. It topped estimates in each of the trailing four quarters with an average earnings surprise of 10.3%.
S&P Global has a long-term earnings growth expectation of 12.5%. It has a positive earnings history, beating estimates in each of the trailing four quarters with an average earnings surprise of 11.1%.
Black Knight has a long-term earnings growth expectation of 13.5%. It has beaten earnings estimates twice in the trailing four quarters with an average positive surprise of 2.4%.
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Verisk (VRSK) Beats Q3 Earnings on Healthy Top-Line Growth
Data analytics services provider Verisk Analytics, Inc. (VRSK - Free Report) reported relatively modest third-quarter 2017 results with healthy year-over-year increase in revenues. Net income from continuing operations declined to $120.7 million from $127.6 million in the year-earlier quarter due to higher operating expenses. On a per share basis, net income from continuing operations decreased to 72 cents from 74 cents in the year-earlier quarter.
Adjusted earnings from continuing operations remained flat year over year at 84 cents per share and beat the Zacks Consensus Estimate by 6 cents.
Total revenues for the reported quarter improved 10.2% to $549.1 million due to modest organic growth from insurance business. Revenues exceeded the Zacks Consensus Estimate of $528 million. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) from continuing operations for the quarter improved 7.5% year over year to $272.3 million.
Verisk Analytics, Inc. Price, Consensus and EPS Surprise
Verisk Analytics, Inc. Price, Consensus and EPS Surprise | Verisk Analytics, Inc. Quote
Segmental Performance
Decision Analytics segment’s revenues increased 4.2% year over year to $355.9 million and accounted for 64.8% of total revenues. Revenues from Energy and Specialized Markets category improved 2.1% to $111.4 million as end markets of energy business stabilized. Insurance category revenues increased 16.9% to $203.9 million on solid performance by underwriting solutions, catastrophe modeling solutions and claims analytics. Financial Services category revenues were up at $40.6 million from $33.8 million in the prior-year period due to strong growth in product solutions.
Risk Assessment segment’s revenues grew 6.9% to $193.2 million, accounting for 35.2% of total revenues. Property-specific rating and underwriting information revenues improved 3.7% to $44.2 million, driven by higher subscription revenues and incremental contribution from newer solutions. Industry-standard insurance programs revenues were up 7.8% to $149 million, primarily attributable to growth in new solutions.
Acquisitions
During the quarter, Verisk acquired three firms to further augment its market presence. The company acquired LCI — a premier provider of risk insight, prediction, and management solutions for banks and creditors — to offer improved insights, proprietary decision-making algorithms and state-of-the-art risk management workflow solutions for banking clients. Verisk also acquired Sequel, a premier insurance and reinsurance software specialist based in London, for £250 million. The strategic buyout will enable Verisk to strengthen its footprint in the U.K. and further expand its comprehensive offerings to the global complex commercial and specialty insurance industry. Additionally, the company acquired G2 Web Services, an industry-leading provider of merchant risk intelligence solutions for acquirers, commercial banks, and other payment system providers, to help clients fight fraud, transaction laundering, and reputational risk within the global payments and e-commerce ecosystem. We expect the acquisitions to be accretive to its earnings in the near future.
Balance Sheet and Cash Flow
At the end of the quarter, Verisk had about $142 million in cash and cash equivalents with long-term debt of $2,278.8 million. Net cash generated from operating activities for the first nine months of 2017 was $592.1 million compared with $484.4 million in the prior-year period. Free cash flow from continuing operations for the first nine months of 2017 increased 27.5% year over year to $478 million.
Verisk repurchased 0.1 million shares during the quarter at an average price of $81.85 per share for $10 million. At the quarter end, the company had $366 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 deleveraging objectives and helps it invest on behalf of its shareholders.
Verisk currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include TransUnion (TRU - Free Report) , S&P Global, Inc. (SPGI - Free Report) and Black Knight, Inc. , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
TransUnion has a long-term earnings growth expectation of 10%. It topped estimates in each of the trailing four quarters with an average earnings surprise of 10.3%.
S&P Global has a long-term earnings growth expectation of 12.5%. It has a positive earnings history, beating estimates in each of the trailing four quarters with an average earnings surprise of 11.1%.
Black Knight has a long-term earnings growth expectation of 13.5%. It has beaten earnings estimates twice in the trailing four quarters with an average positive surprise of 2.4%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>