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Verisk (VRSK) to Report Q1 Earnings: What's in the Cards?

Zacks Equity Research

Verisk Analytics, Inc. VRSK is scheduled to report first-quarter 2020 results on May 5, after the bell.

While the company’s top line is likely to have gained from solid segmental performance, the bottom line is expected to have performed well on the back of organic growth and contribution from acquisitions.

Shares of Verisk have gained 8.1% in the past year compared with 11.6% growth of the industry it belongs to.

Let’s discuss the factors that are likely to get reflected in the upcoming quarterly results.

Segmental Growth Likely to Drive Top Line

Strength across all the segments — Insurance, Energy and Specialized Markets as well as Financial Services— is likely to have had a positive impact on Verisk’s first-quarter 2020 revenues. The Zacks Consensus Estimate for revenues is pegged at $685.58 million, which indicates growth of 9.7% from the year-ago quarter’s reported figure.

The consensus estimate for Insurance segment revenues is pegged at $479 million, indicating growth of 6.2% from the prior-year quarter’s reported figure. Segment revenues are expected to have benefited from strength in Underwriting & rating and Claims.

Verisk Analytics, Inc. Price and EPS Surprise

 

Verisk Analytics, Inc. Price and EPS Surprise

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

 

Strength in the company’s industry-standard insurance programs, property-specific underwriting and catastrophe modeling solutions might have boosted Underwriting & Rating revenues. Claims revenues are likely to have gained from repair cost estimating, workers’ compensation claim solution services and claims analytics solutions.

The consensus mark for Energy and Specialized Markets segment revenues is pegged at $164 million, which indicates an increase of 25.2% from the year-ago quarter’s reported figure. Revenues from market and cost intelligence solutions, environmental health as well as safety service and core research are expected to have aided the segment’s performance.

The consensus estimate for Financial Services segment revenues is pegged at $44.2 million, which suggests year-over-year growth of 2.8%. The segment is likely to have benefited from growth in fraud and credit risk management solutions as well as portfolio management solutions.

In fourth-quarter 2019, total revenues of $676.8 million increased 10.2% year over year.

Organic Growth & Acquisitions Likely to Drive Bottom Line

Solid organic growth, contribution from acquisitions and lower share count are likely to have partially offset headwinds stemming from higher depreciation and amortization, interest expenses and increased effective tax rate. This is expected to get reflected in Verisk’s first-quarter 2020 earnings. The Zacks Consensus Estimate for  first-quarter earnings is pegged at $1.14 per share, which indicates growth of 10.7% from the year-ago quarter’s reported figure. In fourth-quarter 2020, adjusted earnings of $1.13 per share increased 8.7% year over year.

What Our Model Says

Our proven Zacks model does not predict an earnings beat for Verisk this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here as elaborated below.You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Verisk has an Earnings ESP of -2.44% as the Most Accurate Estimate is pegged at $1.11 per share compared with the Zacks Consensus Estimate of $1.14. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Verisk carries a Zacks Rank #3, currently.

Stocks to Consider

Here are a few stocks from the broader Zacks Business Services sector that investors may consider as our model shows that these have the right combination of elements to beat on first-quarter 2020 earnings.

Green Dot Corporation GDOT has an Earnings ESP of +3.83% and a Zacks Rank of 3.

ICF International, Inc. ICFI has an Earnings ESP of +3.08% and currently carries a Zacks Rank of 3.

US Ecology, Inc. ECOL has an Earnings ESP of +57.89% and a Zacks Rank of 3.

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