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Verisk (VRSK) Q3 Earnings & Revenues Top Estimates, Rise Y/Y

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Zacks Equity Research
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Verisk Analytics, Inc. VRSK reported solid third-quarter 2020 results, with earnings and revenues surpassing the Zacks Consensus Estimate.

Adjusted earnings per share of $1.32 beat the consensus mark by 9.1% and rose 17.9% on a year-over-year basis. The upside can be attributed to cost discipline in the business, coronavirus-led reduction in travel expenses and lower average share count

Revenues of $702.7 million beat the consensus estimate by 1.5% and increased 7.6% year over year on a reported basis and 3.6% on an organic constant-currency (cc) basis.

So far this year, shares of Verisk have gained 31.7 in contrast to 3.5% decline of the industry it belongs to. Meanwhile, the Zacks S&P 500 composite has gained 5%.

 

Segmental Performance

Insurance segment revenues totaled $498.6 million, up 6.3% year over year on a reported basis and 5.2% in organic cc.

Within the segment, underwriting and rating revenues of $347.9 million rose 11.3% on a reported basis and 6.5% in organic cc. The upside was primarily driven by an annual increase in prices derived from the continued enhancements of the solutions’ contents within the industry-standard insurance programs, sale of expanded solutions to existing customers in commercial and personal lines, and contributions from catastrophe-modeling services. These increases were partially offset by a decrease in certain transactional revenues.

Claims revenues amounted to $150.7 million, declining 3.8% on a reported basis but improving 2.5% in organic cc. The top line was negativelyimpacted by the injunction ruling against roof-measurement solutions and decline in certain transactional revenues in connection with the COVID-19 pandemic.

Energy and Specialized Markets segment revenues of $163.8 million increased 16.7% year over year on a reported basis but declined 1% in organic cc. The uptick can be attributed tocontributions from the Genscape acquisition, environmental health and safety-service solutions, core research, and weather-analytics solutions. These were partially offset by declines in cost-intelligence solutions' implementation projects, which did not reoccur, and consulting revenues in connection with the COVID-19 pandemic.

Financial Services segment revenues of $40.3 million declined 7.1% year over year on a reported basis but improved 1.6% in organic cc. The segment was impacted by declines in the company’s spend informed analytic solutions arising from the COVID-19 pandemic and the recent dispositions.

Operating Results

Adjusted EBITDA of $366.2 million increased 18.4% on a reported basis and 14.8% onorganic cc. Adjusted EBITDA margin came in at 52.1% compared with 47.4% in the prior-year quarter.

Verisk Analytics, Inc. Price, Consensus and EPS Surprise

Verisk Analytics, Inc. Price, Consensus and EPS Surprise
Verisk Analytics, Inc. Price, Consensus and EPS Surprise

Verisk Analytics, Inc. price-consensus-eps-surprise-chart | Verisk Analytics, Inc. Quote

Balance Sheet and Cash Flow

Verisk exited third-quarter 2020 with cash and cash equivalents of $309.4 million compared with $204.4 million at the end of the prior quarter. Long-term debt was $2.69 billion compared with $2.65 billion at the end of the prior quarter.

The company generated $207.1 million of cash from operating activities and capex was $65 million. Free cash flow was $142.3 million.

Share Repurchases & Dividend Payout

The company paid out a cash dividend of 27 cents per share on Sep 30. On Oct 28, the company's board of directors approved a quarterly cash dividend of 27 cents, payable on Dec 31, to shareholders of record as of Dec 15.

Including the accelerated share repurchase settled in the third quarter of 2020, the company repurchased nearly 0.3 million shares at an average price of $180.97, for a total cost of $50 million. As of Sep 30, 2020, the company had $329 million available under its share repurchase authorization.

Currently, Verisk carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Business Services Companies

Equifax EFX reported better-than-expected third-quarter 2020 results, with adjusted earnings of $1.87 per share beating the Zacks Consensus Estimate by 16.2% and improving 26.4% on a year-over-year basis. The reported figure exceeded the guided range of $1.30-$1.40.

The Interpublic Group of Companies IPG reported better-than-expected third-quarter 2020 adjusted earnings of 53 cents per share, which beat the Zacks Consensus Estimate by 43.2% and improved 8.2% on a year-over-year basis.

IQVIA Holdings IQV reported solid third-quarter 2020 adjusted earnings per share of $1.63, which beat the consensus mark by 8% and improved 1.9% on a year-over-year basis. The reported figure was above the guided range of $1.47-$1.55.

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