Shares of Verisk Analytics, Inc. VRSK gained 13.4% in the past year, against the 1.6% decline of the industry it belongs to.
With expected long-term earnings per share (EPS) growth rate of 11.7% and a market cap of $18.1 billion, Verisk is a stock that investors should retain in their portfolio for now.
Factors That Bode Well for the Company
Using advanced technologies to collect and analyze data, Verisk draws on unique data assets and deep domain expertise to provide predictive analytics and decision support solutions that are integrated into customer workflows. The scalability of its products has led to cash-generative businesses characterized by high net margins and relatively low capital intensity.
Verisk continues to witness higher organic revenue growth through a combination of increase in new customers for existing solutions, cross-sale of existing solutions to customers and the sale of new solutions. The company continuously seeks to expand portfolio by leveraging deep knowledge and embedded position to develop new, proprietary data sets and predictive analytics by working with customers to understand their evolving needs.
Verisk Analytics, Inc. Revenue (TTM)
Verisk Analytics, Inc. Revenue (TTM) | Verisk Analytics, Inc. Quote
Verisk’s operation in a large and diverse addressable market with low customer concentration helps mitigate operational risks. With high barriers to entry in the industry, Verisk enjoys a dominant position.
The company’s efforts to stay technologically updated to meet varying customer and client demands are impressive. The company is an expert in providing predictive data analytics decision by using advanced technologies to collect, interpret and analyze different types of data sets in real time and at scale. It mainly uses advanced technologies such as the latest remote sensing and machine learning technologies along with cloud computing, which primarily drive the company’s business. Deep technical prowess for analytics and Big Data provide it an unrivalled edge over competitors.
In spite of significant growth prospects, Verisk is not free from headwinds. It has a debt-laden balance sheet that may limit future expansion and worsen risk profile. As of Sep 30, 2018, long-term debt was $2.04 billion, while cash and cash equivalents were $147.6 million. Moreover, consolidation of huge amount of data by the company’s business model makes it susceptible to operational risks. Nevertheless, we believe that Verisk’s strong data analytics suite bode well in the long term.
Zacks Rank & Stocks to Consider
Currently, Verisk carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader Business Services sector are BG Staffing, Inc BGSF, Waste Connections, Inc WCN and Republic Services, Inc RSG, 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 EPS (three to five years) growth rate for BG Staffing, Waste Connections and Republic Services is 20%, 11.7% and 10.7%, respectively.
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