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Verisk (VRSK) Rides on Data Analysis Strength Amid High Debt
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Shares of Verisk Analytics, Inc. (VRSK - Free Report) have gained 24.9% so far this year, outperforming 8.2% growth of the Zacks S&P 500 composite. In contrast, the industry it belongs to declined 1.1%.
The company has an expected long-term earnings per share (three to five years) growth rate of 10.4%. Further, earnings are anticipated to register 11.7% growth in 2020 and 9.3% in 2021.
Notably, the company’s second-quarter 2020 adjusted earnings per share of $1.29 beat the Zacks Consensus Estimate by 9.3% and rose 17.3% on a year-over-year basis. Revenues of $678.8 million missed the consensus estimate by 0.7% but increased 4% year over year on a reported basis and 1.1% on an organic constant-currency (cc) basis.
Data-Analytics Expertise and Robust Organic Growth Bode Well
Verisk’s expertise in providing predictive data-analytics decision by using advanced technologies to collect and interpret different types of data sets is impressive. The company mainly uses advanced technologies such as latest remote sensing and machine-learning technologies along with cloud computing to serve customers in areas of rating, underwriting, claims, catastrophe and weather risk, natural-resources intelligence, and economic forecasting. Its efforts to stay technologically updated to meet varying client demands and its technical prowess in analytics and Big Data provide Verisk an edge over its competitors.
Higher organic-revenue growth through a combination of increase in new customers for existing solutions, cross-sale of its existing solutions to existing customers and the sale of new solutions will help Verisk create long-term value. In second-quarter 2020, total revenues grew 1.1% on an organic constant-currency basis.
Moreover, Verisk continues to earn the majority of its revenues from subscriptions and long-term agreements. In the first half of 2020, Verisk’s three reportable segments, namely, Insurance, Energy and Specialized Markets, and Financial Services generated a respective 83%, 85% and 75% of revenues from subscriptions and long-term agreements for its solutions.
Debt Woes Stay
Verisk has a debt-laden balance sheet. Total debt at the end of second-quarter 2020 was $3.43 billion, compared with $3.33 billion at the end of the prior quarter. Total-debt-to-total capital ratio of 0.62 is higher than the industry and the previous quarter’s ratio of 0.61. An increase in debt-to-capitalization ratio indicates higher risk of insolvency in challenging times.
Further, the company’s cash and cash equivalent of $309 million at the end of the second quarter was well below this debt level, underscoring that the company doesn’t have enough cash to meet this debt burden. Also, the cash level cannot meet the short-term debt of $491 million.
The long-term expected-earnings per share (three to five years) growth rate for IQVIA Holdings, ICF International and CoreLogic is 9.8%, 10% and 12%, respectively.
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Verisk (VRSK) Rides on Data Analysis Strength Amid High Debt
Shares of Verisk Analytics, Inc. (VRSK - Free Report) have gained 24.9% so far this year, outperforming 8.2% growth of the Zacks S&P 500 composite. In contrast, the industry it belongs to declined 1.1%.
The company has an expected long-term earnings per share (three to five years) growth rate of 10.4%. Further, earnings are anticipated to register 11.7% growth in 2020 and 9.3% in 2021.
Notably, the company’s second-quarter 2020 adjusted earnings per share of $1.29 beat the Zacks Consensus Estimate by 9.3% and rose 17.3% on a year-over-year basis. Revenues of $678.8 million missed the consensus estimate by 0.7% but increased 4% year over year on a reported basis and 1.1% on an organic constant-currency (cc) basis.
Data-Analytics Expertise and Robust Organic Growth Bode Well
Verisk’s expertise in providing predictive data-analytics decision by using advanced technologies to collect and interpret different types of data sets is impressive. The company mainly uses advanced technologies such as latest remote sensing and machine-learning technologies along with cloud computing to serve customers in areas of rating, underwriting, claims, catastrophe and weather risk, natural-resources intelligence, and economic forecasting. Its efforts to stay technologically updated to meet varying client demands and its technical prowess in analytics and Big Data provide Verisk an edge over its competitors.
Higher organic-revenue growth through a combination of increase in new customers for existing solutions, cross-sale of its existing solutions to existing customers and the sale of new solutions will help Verisk create long-term value. In second-quarter 2020, total revenues grew 1.1% on an organic constant-currency basis.
Moreover, Verisk continues to earn the majority of its revenues from subscriptions and long-term agreements. In the first half of 2020, Verisk’s three reportable segments, namely, Insurance, Energy and Specialized Markets, and Financial Services generated a respective 83%, 85% and 75% of revenues from subscriptions and long-term agreements for its solutions.
Debt Woes Stay
Verisk has a debt-laden balance sheet. Total debt at the end of second-quarter 2020 was $3.43 billion, compared with $3.33 billion at the end of the prior quarter. Total-debt-to-total capital ratio of 0.62 is higher than the industry and the previous quarter’s ratio of 0.61. An increase in debt-to-capitalization ratio indicates higher risk of insolvency in challenging times.
Further, the company’s cash and cash equivalent of $309 million at the end of the second quarter was well below this debt level, underscoring that the company doesn’t have enough cash to meet this debt burden. Also, the cash level cannot meet the short-term debt of $491 million.
Zacks Rank and Stocks to Consider
Verisk currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Business Services sector are IQVIA Holdings (IQV - Free Report) , ICF International (ICFI - Free Report) and CoreLogic , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The long-term expected-earnings per share (three to five years) growth rate for IQVIA Holdings, ICF International and CoreLogic is 9.8%, 10% and 12%, respectively.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through Q2 2020, while the S&P 500 gained an impressive +44.0%, five of our strategies returned +50.9%, +93.8%, +122.2%, +153.0%, and even +156.8%.
This outperformance has not just been a recent phenomenon. From 2000 – Q2 2020, while the S&P averaged +5.5% per year, our top strategies averaged up to +51.7% per year.
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