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Verisk (VRSK) Beats Q2 Earnings on Healthy Organic Growth
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Data analytics services provider Verisk Analytics, Inc. (VRSK - Free Report) reported solid second-quarter 2017 results with healthy year-over-year increase in earnings from continuing operations. Revenues also increased from the prior-year quarter.
Net income from continuing operations improved to $121.0 million from $106.8 million in the year-earlier quarter primarily driven by top-line growth. On a per share basis, net income from continuing operations increased to 72 cents from 62 cents in the year-earlier quarter.
Adjusted earnings from continuing operations were up 12.3% year over year to 82 cents per share and beat the Zacks Consensus Estimate by 5 cents.
Verisk Analytics, Inc. Price, Consensus and EPS Surprise
Total revenue for the reported quarter improved to $523.2 million from $498.3 million in the prior-year period due to modest organic growth at constant currency basis, led by solid insurance business. Revenues exceeded the Zacks Consensus Estimate of $520 million. EBITDA (earnings before interest, tax, depreciation and amortization) from continuing operations for the quarter improved 3.7% year over year to $254.1 million.
Segmental Performance
Decision Analytics segment’s revenues from continuing operations increased 4.2% year over year to $330.6 million and accounted for 63.2% of total revenue. Energy and Specialized Markets category revenues declined 0.7% year over year to $110.3 million, owing to end-market headwinds and lower revenues in environmental health and safety solutions. Insurance category revenues increased 8.8% to $191.0 million on solid performance by underwriting solutions, catastrophe modeling solutions and claims analytics. Financial Services category revenues were down to $29.3 million from $30.6 million in the prior-year period due to completed contracts.
Risk Assessment segment’s revenues grew 6.4% to $192.6 million, accounting for 36.8% of total revenue. Property-specific rating and underwriting information revenues improved 4.7% to $43.8 million, driven by an increase in underwriting solutions subscription revenues. Industry-standard insurance programs revenues were up 6.9% to $145.6 million, primarily attributable to growth in new solutions.
Acquisitions
During the quarter, Verisk acquired seven premier aerial imagery firms to support its Geomni business. The strategic acquisitions are likely to create a proprietary database of property information derived from multi-tier, multi-spectral images in order to unlock a large addressable market. Consequently, Verisk aims to leverage its expertise in computer-vision-based imagery processing and large-scale data management to meet the increasing needs of property/casualty insurance with the required frequency, resolution and coverage across the U.S. We expect the acquisitions to be accretive to the company’s earnings in the near future.
Balance Sheet and Cash Flow
At the end of the quarter, Verisk had about $140.7 million in cash and cash equivalents with long-term debt of $2,276.6 million. Net cash generated from operating activities for the first half of 2017 was $429.8 million compared with $385.1 million in the prior-year period. Free cash flow from continuing operations for the first six months of 2017 increased 14.5% year over year to $357.3 million.
Verisk repurchased 2 million shares during the quarter at an average price of $79.73 per share for $156 million. At the quarter end, the company had $376 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 its deleveraging objectives and helps it invest on behalf of its shareholders.
TransUnion has a long-term earnings growth expectation of 10%. It topped estimates thrice in the trailing four quarters with an average earnings surprise of 11.8%.
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 9.5%.
Gartner has a long-term earnings growth expectation of 17.3%. It has a positive earnings history, beating estimates thrice in the trailing four quarters with an average earnings surprise of 4.6%.
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Verisk (VRSK) Beats Q2 Earnings on Healthy Organic Growth
Data analytics services provider Verisk Analytics, Inc. (VRSK - Free Report) reported solid second-quarter 2017 results with healthy year-over-year increase in earnings from continuing operations. Revenues also increased from the prior-year quarter.
Net income from continuing operations improved to $121.0 million from $106.8 million in the year-earlier quarter primarily driven by top-line growth. On a per share basis, net income from continuing operations increased to 72 cents from 62 cents in the year-earlier quarter.
Adjusted earnings from continuing operations were up 12.3% year over year to 82 cents per share and beat the Zacks Consensus Estimate by 5 cents.
Verisk Analytics, Inc. Price, Consensus and EPS Surprise
Verisk Analytics, Inc. Price, Consensus and EPS Surprise | Verisk Analytics, Inc. Quote
Total revenue for the reported quarter improved to $523.2 million from $498.3 million in the prior-year period due to modest organic growth at constant currency basis, led by solid insurance business. Revenues exceeded the Zacks Consensus Estimate of $520 million. EBITDA (earnings before interest, tax, depreciation and amortization) from continuing operations for the quarter improved 3.7% year over year to $254.1 million.
Segmental Performance
Decision Analytics segment’s revenues from continuing operations increased 4.2% year over year to $330.6 million and accounted for 63.2% of total revenue. Energy and Specialized Markets category revenues declined 0.7% year over year to $110.3 million, owing to end-market headwinds and lower revenues in environmental health and safety solutions. Insurance category revenues increased 8.8% to $191.0 million on solid performance by underwriting solutions, catastrophe modeling solutions and claims analytics. Financial Services category revenues were down to $29.3 million from $30.6 million in the prior-year period due to completed contracts.
Risk Assessment segment’s revenues grew 6.4% to $192.6 million, accounting for 36.8% of total revenue. Property-specific rating and underwriting information revenues improved 4.7% to $43.8 million, driven by an increase in underwriting solutions subscription revenues. Industry-standard insurance programs revenues were up 6.9% to $145.6 million, primarily attributable to growth in new solutions.
Acquisitions
During the quarter, Verisk acquired seven premier aerial imagery firms to support its Geomni business. The strategic acquisitions are likely to create a proprietary database of property information derived from multi-tier, multi-spectral images in order to unlock a large addressable market. Consequently, Verisk aims to leverage its expertise in computer-vision-based imagery processing and large-scale data management to meet the increasing needs of property/casualty insurance with the required frequency, resolution and coverage across the U.S. We expect the acquisitions to be accretive to the company’s earnings in the near future.
Balance Sheet and Cash Flow
At the end of the quarter, Verisk had about $140.7 million in cash and cash equivalents with long-term debt of $2,276.6 million. Net cash generated from operating activities for the first half of 2017 was $429.8 million compared with $385.1 million in the prior-year period. Free cash flow from continuing operations for the first six months of 2017 increased 14.5% year over year to $357.3 million.
Verisk repurchased 2 million shares during the quarter at an average price of $79.73 per share for $156 million. At the quarter end, the company had $376 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 its deleveraging objectives and helps it invest on behalf of its shareholders.
Verisk currently carries a Zacks Rank #4 (Sell). Better-ranked stocks in the industry include TransUnion (TRU - Free Report) , S&P Global, Inc. (SPGI - Free Report) and Gartner, Inc. (IT - 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.
TransUnion has a long-term earnings growth expectation of 10%. It topped estimates thrice in the trailing four quarters with an average earnings surprise of 11.8%.
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 9.5%.
Gartner has a long-term earnings growth expectation of 17.3%. It has a positive earnings history, beating estimates thrice in the trailing four quarters with an average earnings surprise of 4.6%.
More Stock News: Tech Opportunity Worth $386 Billion in 2017
From driverless cars to artificial intelligence, we've seen an unsurpassed growth of high-tech products in recent months. Yesterday's science-fiction is becoming today's reality. Despite all the innovation, there is a single component no tech company can survive without. Demand for this critical device will reach $387 billion this year alone, and it's likely to grow even faster in the future.
Zacks has released a brand-new Special Report to help you take advantage of this exciting investment opportunity. Most importantly, it reveals 4 stocks with massive profit potential. See these stocks now>>