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Verisk (VRSK) Down 5.4% Since Earnings Report: Can It Rebound?
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It has been more than a month since the last earnings report for Verisk Analytics, Inc. (VRSK - Free Report) . Shares have lost about 5.4% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Verisk Beats Q2 Earnings on Healthy Organic Growth
Verisk 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 $0.72 from $0.62 in the year-earlier quarter.
Adjusted earnings from continuing operations were up 12.3% year over year to $0.82 per share and beat the Zacks Consensus Estimate by $0.05.
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.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last month as none of them issued any earnings estimate revisions.
At this time, Verisk Analytics' stock has a subpar Growth Score of D, a grade with the same score on the momentum front. 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate investors will probably be better served looking elsewhere.
Outlook
Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.
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Verisk (VRSK) Down 5.4% Since Earnings Report: Can It Rebound?
It has been more than a month since the last earnings report for Verisk Analytics, Inc. (VRSK - Free Report) . Shares have lost about 5.4% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Verisk Beats Q2 Earnings on Healthy Organic Growth
Verisk 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 $0.72 from $0.62 in the year-earlier quarter.
Adjusted earnings from continuing operations were up 12.3% year over year to $0.82 per share and beat the Zacks Consensus Estimate by $0.05.
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.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last month as none of them issued any earnings estimate revisions.
Verisk Analytics, Inc. Price and Consensus
Verisk Analytics, Inc. Price and Consensus | Verisk Analytics, Inc. Quote
VGM Scores
At this time, Verisk Analytics' stock has a subpar Growth Score of D, a grade with the same score on the momentum front. 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate investors will probably be better served looking elsewhere.
Outlook
Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.