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Verisk: Buy The Dip After Another Year Of Profitable Growth

Mar. 02, 2020 10:16 AM ETVerisk Analytics, Inc. (VRSK)6 Comments


  • Verisk posted respectable growth across the board, from revenue, via adjusted EBITDA, to EPS and free cash flow.
  • The financial performance once again confirms the reliability of its mostly subscription-based revenue and scalability of its business model.
  • The company continues to be steadfast in rewarding its shareholders through share buyback and dividend growth.
  • The stock may not look cheap; however, should the post-quarterly earnings reporting weakness continue, a buy-the-dip opportunity may be near.
  • Looking for a helping hand in the market? Members of The Natural Resources Hub get exclusive ideas and guidance to navigate any climate. Get started today »

Verisk Analytics is a leading data analytics provider serving customers in: insurance energy and specialized markets financial services

On February 18, 2020, Verisk (NASDAQ:VRSK) announced the operational and financial results for 4Q and full-year ended December 31, 2019.

Below, let's have an under-the-hood look at these results in an attempt to shine some new light on the investment thesis previously presented here and here.

Top-line growth

2019 performance. In full-year 2019, Verisk grew the top-line by 6.7% to $2,607.1 million on an organic constant currency basis. Both the insurance and energy segments expanded 7.0%, while the financial services segment increased by 2.9%.

The insurance segment contributed 71.2% of the annual revenue, the energy segments 22.0%, and the financial services segment 6.8% (Table 1).

Table 1. Revenues and revenue growth by business segment in millions. OCC, organic constant currency.

Long-term growth trend. Verisk was able to maintain the growth momentum that has been operative since 2007 (Fig. 1).

Fig. 1. Long-term sustainable growth of Verisk. Note 1, organic growth includes businesses owned for a full year or more at measurement; 2, figures exclude discontinued operations; 3, normalized organic constant currency growth excludes the impact of non-recurring revenue benefits in 2017. Source.

Revenue quality. Verisk continued to have high quality in revenue, as can be seen in that 81% of the sales were derived from subscription-based, recurring sources in 2019. Furthermore, the company generated 77% of the revenue in the U.S. (Fig. 2).

Fig. 2. High-quality recurring revenue across a diversified solution set.


Adjusted EBITDA. Verisk grew the adjusted EBITDA to 1,224.1 million, up 8.3%. Please note, the adjusted EBITDA more accurately reflects the state of operations because it takes into consideration the $125 million penalties assessed by the court to EagleView Technologies, being a one-time item (see here).

Table 2. Adjusted EBITDA by year.

The expansion of the adjusted EBITDA falls in the range of growth rate established

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This article was written by

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Disclosure: Besides myself, TNRH is fortunate enough to have multiple other contributing authors who post articles for and share their views with our thriving community. These authors include Silver Coast Research, among others. I'd like to emphasize that the articles contributed by these authors are the product of their respective independent research and analysis.

Analyst’s Disclosure: I am/we are long VRSK. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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