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Verisk (VRSK) Up 8.3% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Verisk Analytics (VRSK - Free Report) . Shares have added about 8.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Verisk due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Verisk Q2 Earnings Miss Estimates, Revenues Beat

Verisk Analytics reported mixed second-quarter 2021 results, with earnings lagging the Zacks Consensus Estimate while revenues beating the same.

Adjusted earnings per share of $1.17 missed the consensus mark by 12.7% and fell 9.3% on a year-over-year basis. The downside was backed by higher effective tax rate, partially offset by organic growth in the business, contributions from acquisitions and lower average share count.

Revenues of $747.5 million beat the consensus estimate by 2% and increased 10.1% year over year on a reported basis and 6.3% on an organic constant-currency (cc) basis.

Segmental Performance

Insurance segment revenues totaled $550 million, up 11.8% year over year on a reported basis and 7.8% on an organic cc basis.

Within the segment, underwriting and rating revenues of $388.4 million rose 11.2% on a reported basis and 7.6% on an organic cc basis. The upside was primarily driven by an annual increase in prices derived from continued enhancements of the solutions’ contents within the industry-standard insurance programs, sale of expanded solutions to existing customers in commercial and personal lines, and contributions from catastrophe-modeling services and international software solutions.

Claims revenues amounted to $161.6 million, improving 13.2% on a reported basis and 8.4% on an organic cc basis. The top line was positively impacted by repair cost estimating solutions revenues and claims analytics revenues.

Energy and Specialized Markets segment revenues of $162.3 million increased 9.2% year over year on a reported basis and 5% on an organic cc basis. The uptick can be attributed to contributions from consulting, and environmental health and safety service revenues.

Financial Services segment revenues of $35.2 million declined 7.4% year over year on a reported basis and 8.1% on an organic cc basis. The segment was weighed down by certain contract transitions, projects that did not reoccur and lower bankruptcy volumes, which had offset strength in spend informed analytics revenues.

Operating Results

Adjusted EBITDA of $370.8 million increased 6.5% on a reported basis and 4.2% on an organic cc basis. Adjusted EBITDA margin fell to 49.6% from 51.3% in the prior-year quarter.

Cash Flow

Verisk generated $233.2 million of cash from operating activities and capex was $62.5 million. Free cash flow was $170.7 million.

Share Repurchases & Dividend Payout

The company paid out a cash dividend of 29 cents per share on Jun 30. On Jul 28, the company's board of directors approved a quarterly cash dividend of 29 cents, payable on Sep 30, 2021, to holders of record as of Sep 15, 2021.

During the reported quarter, Verisk repurchased almost 834,000 shares at an average price of $179.85 per share, for a total cost of $150 million. As of Jun 30, 2021, the company had $328.8 million available under its share repurchase authorization.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 13.65% due to these changes.

VGM Scores

Currently, Verisk has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Verisk has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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