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What's in Store for Verisk (VRSK) this Earnings Season?
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Business information services firm Verisk Analytics, Inc. (VRSK - Free Report) is scheduled to report first-quarter 2017 results after market close on May 2. In the last reported quarter, adjusted earnings beat the Zacks Consensus Estimate by 3 cents. Over the trailing four quarters, Verisk beat earnings estimates twice, delivering an average positive surprise of 2.34%.
Let’s see how things are shaping up for this announcement.
Key Factors in the First Quarter
Verisk continues to deliver outstanding data analytics solutions to customers across its core verticals of insurance, natural resources, and financial services. During the quarter, Verisk acquired a liability risk modeling and decision support company, Arium for an undisclosed amount. Per the acquisition, Arium became part of Verisk’s AIR Worldwide (AIR) business. This deal augments AIR’s product portfolio with additional modeling solutions and analytics for the casualty market. Arium’s methodologies enable Verisk’s clients to comprehensively manage risks across their portfolios in the casualty market. The company expects this acquisition to be accretive for the company in the quarter to be reported.
In addition, the company also inked an agreement to acquire Bangalore-based data solutions company, Fintellix. The financials of the agreement remain undisclosed. Per the agreement, Fintellix will become part of Verisk’s Argus business. Argus is a leading provider of information, scoring solutions, and advisory services to financial institutions worldwide. Fintellix’s advanced data management platform, along with its regulatory reporting expertise, will be a valuable addition to both Argus and Verisk Analytics. The collaboration will help the company offer better services and highly advanced solutions to its customers. In addition, this deal will also enable Verisk expand its foothold across India as well. The company’s acquisition spree will likely boost the top line.
Verisk aims to create long-term value through organic and better return on invested capital. The company continuously seeks to expand its portfolio by leveraging on its deep knowledge and embedded position to develop new, proprietary data sets and predictive analytics, by working in unison with its customers to understand their evolving needs. Verisk recorded average organic revenue growth of about 8% over the past 10 years. At the same time, the company continues to extend its footprint in new markets, with healthy long-term growth potential, through targeted international expansion. This holistic growth model is expected to strengthen its leading position in the market.
However, a significant portion of the company’s revenues is generated from operations outside the United States. With modest revenues coming from the U.K., Verisk is likely to be stifled by the renegotiated deals and restrictions imposed on trade with other European Union members. Brexit could further result in higher tariff and non-tariff barriers to trade between the U.K. and the European Union, lowering productivity of the company. These undermine the long-term growth potential of the company to some extent.
Verisk’s business model centers on large troves of data. Consequently, the company is susceptible to operational risks related to security breaches in its facilities, computer networks, and databases, resulting in a loss of its credibility and/or customers. Data theft and misuse by third-party contractors could also lead to loss of businesses and jeopardize the fundamental existence of the company.
Earnings Whispers
Despite the inherent strengths, our proven model does not conclusively show that Verisk is likely to beat earnings this quarter as it lacks the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. This is not the case here as you will see below:
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks ESP: Earnings ESP represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate. The Most Accurate estimate for the company stands at 77 cents while the Zacks Consensus Estimate is pegged at 78 cents. So, the difference – the Earnings ESP – is -1.28%.
Zacks Rank: Verisk carries a Zacks Rank #3, which when combined with -1.28% ESP makes surprise prediction difficult.
Note that we caution against stocks with a Zacks Rank #4 or #5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some stocks within the industry that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:
Altra Industrial Motion Corp. , with an Earnings ESP of +5.00%, and a Zacks Rank #2.
Adient plc (ADNT - Free Report) , with an Earnings ESP of +1.64%, and a Zacks Rank #3.
Zacks' Hidden Trades
While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them?
Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors.
Image: Bigstock
What's in Store for Verisk (VRSK) this Earnings Season?
Business information services firm Verisk Analytics, Inc. (VRSK - Free Report) is scheduled to report first-quarter 2017 results after market close on May 2. In the last reported quarter, adjusted earnings beat the Zacks Consensus Estimate by 3 cents. Over the trailing four quarters, Verisk beat earnings estimates twice, delivering an average positive surprise of 2.34%.
Let’s see how things are shaping up for this announcement.
Key Factors in the First Quarter
Verisk continues to deliver outstanding data analytics solutions to customers across its core verticals of insurance, natural resources, and financial services. During the quarter, Verisk acquired a liability risk modeling and decision support company, Arium for an undisclosed amount. Per the acquisition, Arium became part of Verisk’s AIR Worldwide (AIR) business. This deal augments AIR’s product portfolio with additional modeling solutions and analytics for the casualty market. Arium’s methodologies enable Verisk’s clients to comprehensively manage risks across their portfolios in the casualty market. The company expects this acquisition to be accretive for the company in the quarter to be reported.
In addition, the company also inked an agreement to acquire Bangalore-based data solutions company, Fintellix. The financials of the agreement remain undisclosed. Per the agreement, Fintellix will become part of Verisk’s Argus business. Argus is a leading provider of information, scoring solutions, and advisory services to financial institutions worldwide. Fintellix’s advanced data management platform, along with its regulatory reporting expertise, will be a valuable addition to both Argus and Verisk Analytics. The collaboration will help the company offer better services and highly advanced solutions to its customers. In addition, this deal will also enable Verisk expand its foothold across India as well. The company’s acquisition spree will likely boost the top line.
Verisk aims to create long-term value through organic and better return on invested capital. The company continuously seeks to expand its portfolio by leveraging on its deep knowledge and embedded position to develop new, proprietary data sets and predictive analytics, by working in unison with its customers to understand their evolving needs. Verisk recorded average organic revenue growth of about 8% over the past 10 years. At the same time, the company continues to extend its footprint in new markets, with healthy long-term growth potential, through targeted international expansion. This holistic growth model is expected to strengthen its leading position in the market.
However, a significant portion of the company’s revenues is generated from operations outside the United States. With modest revenues coming from the U.K., Verisk is likely to be stifled by the renegotiated deals and restrictions imposed on trade with other European Union members. Brexit could further result in higher tariff and non-tariff barriers to trade between the U.K. and the European Union, lowering productivity of the company. These undermine the long-term growth potential of the company to some extent.
Verisk’s business model centers on large troves of data. Consequently, the company is susceptible to operational risks related to security breaches in its facilities, computer networks, and databases, resulting in a loss of its credibility and/or customers. Data theft and misuse by third-party contractors could also lead to loss of businesses and jeopardize the fundamental existence of the company.
Earnings Whispers
Despite the inherent strengths, our proven model does not conclusively show that Verisk is likely to beat earnings this quarter as it lacks the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. This is not the case here as you will see below:
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks ESP: Earnings ESP represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate. The Most Accurate estimate for the company stands at 77 cents while the Zacks Consensus Estimate is pegged at 78 cents. So, the difference – the Earnings ESP – is -1.28%.
Verisk Analytics, Inc. Price and EPS Surprise
Verisk Analytics, Inc. Price and EPS Surprise | Verisk Analytics, Inc. Quote
Zacks Rank: Verisk carries a Zacks Rank #3, which when combined with -1.28% ESP makes surprise prediction difficult.
Note that we caution against stocks with a Zacks Rank #4 or #5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some stocks within the industry that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:
AGCO Corporation (AGCO - Free Report) , with an Earnings ESP of +5.88%, and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Altra Industrial Motion Corp. , with an Earnings ESP of +5.00%, and a Zacks Rank #2.
Adient plc (ADNT - Free Report) , with an Earnings ESP of +1.64%, and a Zacks Rank #3.
Zacks' Hidden Trades
While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them?
Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors.
Click here for Zacks' secret trade>>