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Shares of Verisk Analytics, Inc. VRSK have surged 33.8% so far this year, outperforming 2.7% growth of the industry it belongs to and 10.4% rise of the Zacks S&P 500 composite.
Let’s delve deeper into the factors that have contributed to the company’s price performance.
Impressive Revenue Performance
Verisk reported revenue beat in all the four quarters of 2019 as well as in the first and third quarters of 2020. This encouraging performance can be attributed to continued strength in the company’s Insurance segment and improvement in the Energy and Specialized Markets segments.
Robust Organic Revenue Growth
Verisk continues to witness higher organic revenue growth through a combination of an increase in new customers for existing solutions, cross-sale of its existing solutions to customers at present, and also the sale of new solutions. The company continuously seeks to expand its portfolio by leveraging its deep knowledge and position. It develops new proprietary data sets and predictive analytics after understanding customers' evolving needs. Notably, Verisk has recorded an average organic revenue growth of about 8% in the past 10 years.During third-quarter 2020, revenues went up 3.6% on an organic constant currency (“OCC”) basis. In 2019, total revenues grew 6.7% on an OCC basis, marking an improvement from 6.1% growth in 2018 and 5.3% in 2017.
Strategic Acquisitions Bode Well
Acquisitions have also been one of the key growth catalysts for Verisk. The company has been continuously acquiring and investing in companies globally in order to expand its data and analytics capabilities across industries.
In 2020, Verisk completed the purchase of Franco Signor, which will become part of Verisk’s Claims Partners business and should help the company strengthen its foothold in the Medicare space.
In 2019, Verisk completed seven acquisitions — FAST to enhance its data and analytics solutions in life insurance and annuities market; Commerce Signals to enhance its Financial Services segment; BuildFax to boost its Insurance segment; Genscape to expand its Wood Mackenzie business line’s existing intelligence in energy data and analytics, and to strengthen its research and consultancy across the natural resources sectors; Keystone Aerial Surveys, Inc. to expand its aerial survey services; Property Pres Wizard to enhance its Insurance segment, and Content as a Service business to strengthen its environmental health and safety services, and to extend its global customer footprint and European operations.
Notably, Verisk’s long-term business strategy includes growth through acquisitions. Internally, it is focused on evaluating and integrating acquisitions that are valuable for its shareholders.
Zacks Rank and Stocks to Consider
Verisk currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Business Services sector are ICF International ICFI, Automatic Data Processing ADP and Insperity NSP, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The long-term expected earnings per share (three to five years) growth rate for ICF International, Automatic Data Processing and Insperity is 10%, 12% and 15%, respectively.
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