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Here's Why Investors Should Hold on to Verisk (VRSK) Stock

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·3 min read
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Verisk Analytics, Inc.’s VRSK shares have had a decent run on the bourses over the past year, gaining 24.8%. The company has an expected long-term earnings per share (three to five years) growth rate of 10.8%. Its earnings are expected to increase 6.8% in 2021 and 11% in 2022, year over year.

Factors That Auger Well

Verisk continues to invest in people, data sets, analytic solutions, technology and complementary businesses with a view to keep itself updated with changing requirements in the markets it serves. The company is maintaining its focus on increasing solution penetration with customers, developing new proprietary data base and predictive analytics, and expanding into new customer sectors.

Verisk draws on unique data assets and deep domain expertise to provide predictive analytics and decision support solutions that are integrated into customer workflows. Specialized and in-depth knowledge in markets such as energy, insurance, financial services and risk management adds value to its analytics. Steady stream of first-to-market innovations and the ability to deeply integrate into customer workflows have allowed the company to strengthen its client base over time. All these initiatives augur well for long-term growth and stability of the company.

The 2020 acquisition of Franco Signor should help Verisk strengthen its foothold in the Medicare space.

Some Risks

Verisk has a debt-laden balance sheet. Total debt at the end of fourth-quarter 2020 was $3.21 billion, higher than $3.15 billion at the end of the prior quarter.

Further, the company’s cash and cash equivalent of $219 million at the end of the quarter was below this debt level. This indicates that the company doesn’t have enough cash to meet this debt burden. Also, the cash level can’t meet the short-term debt of $514 million.

Zacks Rank & Stocks to Consider

Verisk currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Business Services sector are Accenture ACN, Charles River Associates CRAI and TeleTech Holdings TTEC. While TeleTech sportsa Zacks Rank #1 (Strong Buy), Accenture and Charles River carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term expected earnings per share (three to five years) growth rate for Accenture, Charles River and TeleTech is pegged at 10%, 13% and 14.7%, respectively.

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Charles River Associates (CRAI) : Free Stock Analysis Report

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Accenture PLC (ACN) : Free Stock Analysis Report

Verisk Analytics, Inc. (VRSK) : Free Stock Analysis Report

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