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Verisk Buys MarketStance to Strengthen Industry Foothold

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Leading data analytics provider Verisk Analytics, Inc. (VRSK - Free Report) has outperformed the Zacks Business Information Service sector with an average year-to-date return of 9.5% compared with 2.9% for the latter. In addition, over of the last 30 days, earnings estimates for the current year have been revised 2.7% upward. This estimate revision trend, backed by its strategic acquisitions and partnerships, should translate into further price gain for the stock in the quarters ahead.

Recently the company announced the acquisition of MarketStance. It will function under ISO, which is part of Verisk Analytics business. On completion of the deal, Dr. Fritz Yohn, chief executive officer and founder of MarketStance will continue to lead the business.

Headquartered in Middletown, CT, MarketStance is a primary provider of market intelligence and analytics services in the insurance industry. ISO has been providing information about property/casualty insurance risk services since 1971. This strategic transaction will fortify Verisk’s foothold in the insurance industry. With constant advancements in the market, customers demand unique insights to help them profitably grow their businesses. MarketStance’s proprietary analytics model will help provide actionable insights around these core needs. This, in turn, will enhance ISO’s service offerings. We expect this acquisition to be accretive for the company in the near future.

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. These empower its customers to take 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 higher cash generation in 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 on 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 has recorded average organic revenue growth of about 8% over the past 10 years. At the same time, the company continues to extend its footprint in new markets, with healthy long-term growth potential, through targeted international expansion. This holistic growth model augurs well to strengthen its leading position in the market.

We are encouraged with this Zacks Rank #3 (Hold) stock’s latest acquisition. Some better-ranked stocks in the industry include LifeLock, Inc. , TransUnion (TRU - Free Report) and Exponent Inc. (EXPO - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

LifeLock is currently trading at a forward P/E of 53.8x and has beaten estimates thrice over the trailing four quarters, for an average positive earnings surprise of 20.0%.

TransUnion has a long-term earnings growth expectation of 12.8% and is currently trading at a forward P/E of 24.1x.

Exponent has a long-term earnings growth expectation of 12.0% and is currently trading at a forward P/E of 40.7x.

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