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A month has gone by since the last earnings report for Verisk Analytics (VRSK - Free Report) . Shares were flat in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent trend continue leading up to its next earnings release, or is Verisk due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Verisk Q1 Earnings & Revenues Miss Estimates
Verisk Analytics reported disappointing first-quarter 2021 results, with earnings and revenues lagging the Zacks Consensus Estimate.
Adjusted earnings per share of $1.23 missed the consensus mark by 1.6% but rose 5.1% on a year-over-year basis. The year-over-year upside can be attributed to cost discipline in the business, coronavirus-led reduction in travel expenses and lower average share count.
Revenues of $726.1 million missed the consensus estimate by 0.3% but increased 5.3% year over year on a reported basis and 3.4% on an organic constant-currency (cc) basis.
Segmental Performance
Insurance segment revenues totaled $535.6 million, up 8.1% year over year on a reported basis and 6% on an organic cc basis.
Within the segment, underwriting and rating revenues of $377.1 million rose 7.7% on a reported basis and 5.3% on an organic cc basis. The upside was primarily driven by an annual increase in prices derived from 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 and international software solutions. These increases were partially offset by a decrease in certain transactional revenues.
Claims revenues amounted to $158.5 million, improving 9% on a reported basis and 7.9% on an organic cc basis. The top line was positivelyimpacted by repair cost estimating solutions revenues.
Energy and Specialized Markets segment revenues of $156.2 million increased 1.3% year over year on a reported basis but declined 0.6% on an organic cc basis. The uptick can be attributed tocontributions from the growth in core research, and environmental health and safety service revenues, which were partially offset by declines in transactional and consulting revenues.
Financial Services segment revenues of $34.3 million declined 15% year over year on a reported basis and 12.8% on an organic cc basis. The segment was weighed down by certain contract transitions, projects that did not reoccur and as a result of the COVID-19 pandemic, lower levels of consulting spending from bank customers.
Operating Results
Adjusted EBITDA of $345.5 million increased 8.7% on a reported basis and 5.2% on an organic cc basis. Adjusted EBITDA margin rose to 47.6% from 46.1% in the prior-year quarter.
Balance Sheet and Cash Flow
Verisk exited first-quarter 2021 with cash and cash equivalents of $390.9 million compared with $218.8 million at the end of the prior quarter. Long-term debt of $2.69 billion remained flat sequentially.
The company generated $448.7 million of cash from operating activities and capex was $59.2 million. Free cash flow was $389.5 million.
Share Repurchases & Dividend Payout
The company paid out a cash dividend of 29 cents per share on Mar 31. On Apr 28, the company's board of directors approved a quarterly cash dividend of 29 cents, payable on Jun 30, 2021, to holders of record as of Jun 15, 2021.
During the reported quarter, the company repurchased almost 561,000 shares at an average price of $178.4 per share, for a total cost of $100 million. As of Mar 31, 2021, the company had $478.8 million available under its share repurchase authorization.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, Verisk has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Verisk has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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How Has VRSK Performed 30 Days Post Earnings
A month has gone by since the last earnings report for Verisk Analytics (VRSK - Free Report) . Shares were flat in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent trend continue leading up to its next earnings release, or is Verisk due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Verisk Q1 Earnings & Revenues Miss Estimates
Verisk Analytics reported disappointing first-quarter 2021 results, with earnings and revenues lagging the Zacks Consensus Estimate.
Adjusted earnings per share of $1.23 missed the consensus mark by 1.6% but rose 5.1% on a year-over-year basis. The year-over-year upside can be attributed to cost discipline in the business, coronavirus-led reduction in travel expenses and lower average share count.
Revenues of $726.1 million missed the consensus estimate by 0.3% but increased 5.3% year over year on a reported basis and 3.4% on an organic constant-currency (cc) basis.
Segmental Performance
Insurance segment revenues totaled $535.6 million, up 8.1% year over year on a reported basis and 6% on an organic cc basis.
Within the segment, underwriting and rating revenues of $377.1 million rose 7.7% on a reported basis and 5.3% on an organic cc basis. The upside was primarily driven by an annual increase in prices derived from 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 and international software solutions. These increases were partially offset by a decrease in certain transactional revenues.
Claims revenues amounted to $158.5 million, improving 9% on a reported basis and 7.9% on an organic cc basis. The top line was positivelyimpacted by repair cost estimating solutions revenues.
Energy and Specialized Markets segment revenues of $156.2 million increased 1.3% year over year on a reported basis but declined 0.6% on an organic cc basis. The uptick can be attributed tocontributions from the growth in core research, and environmental health and safety service revenues, which were partially offset by declines in transactional and consulting revenues.
Financial Services segment revenues of $34.3 million declined 15% year over year on a reported basis and 12.8% on an organic cc basis. The segment was weighed down by certain contract transitions, projects that did not reoccur and as a result of the COVID-19 pandemic, lower levels of consulting spending from bank customers.
Operating Results
Adjusted EBITDA of $345.5 million increased 8.7% on a reported basis and 5.2% on an organic cc basis. Adjusted EBITDA margin rose to 47.6% from 46.1% in the prior-year quarter.
Balance Sheet and Cash Flow
Verisk exited first-quarter 2021 with cash and cash equivalents of $390.9 million compared with $218.8 million at the end of the prior quarter. Long-term debt of $2.69 billion remained flat sequentially.
The company generated $448.7 million of cash from operating activities and capex was $59.2 million. Free cash flow was $389.5 million.
Share Repurchases & Dividend Payout
The company paid out a cash dividend of 29 cents per share on Mar 31. On Apr 28, the company's board of directors approved a quarterly cash dividend of 29 cents, payable on Jun 30, 2021, to holders of record as of Jun 15, 2021.
During the reported quarter, the company repurchased almost 561,000 shares at an average price of $178.4 per share, for a total cost of $100 million. As of Mar 31, 2021, the company had $478.8 million available under its share repurchase authorization.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, Verisk has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Verisk has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.