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Shareholders of Verisk Analytics, Inc. (NASDAQ:VRSK) will be pleased this week, given that the stock price is up 11% to US$197 following its latest third-quarter results. Revenues were US$703m, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$1.12 were also better than expected, beating analyst predictions by 18%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Verisk Analytics after the latest results.
Following the latest results, Verisk Analytics' 16 analysts are now forecasting revenues of US$2.96b in 2021. This would be a satisfactory 7.8% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to swell 12% to US$4.59. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.94b and earnings per share (EPS) of US$4.55 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
The analysts reconfirmed their price target of US$205, showing that the business is executing well and in line with expectations. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Verisk Analytics analyst has a price target of US$227 per share, while the most pessimistic values it at US$172. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Verisk Analytics is an easy business to forecast or the the analysts are all using similar assumptions.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We can infer from the latest estimates that forecasts expect a continuation of Verisk Analytics'historical trends, as next year's 7.8% revenue growth is roughly in line with 9.1% annual revenue growth over the past five years. Juxtapose this against our data, which suggests that other companies (with analyst coverage) in the industry are forecast to see their revenues grow 8.1% per year. It's clear that while Verisk Analytics' revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at US$205, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Verisk Analytics analysts - going out to 2022, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Verisk Analytics , and understanding it should be part of your investment process.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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