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Verisk (VRSK) Tops Q1 Earnings on Robust Organic Growth
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Verisk Analytics, Inc. (VRSK - Free Report) reported impressive first-quarter 2018 results surpassing the Zacks Consensus Estimate on both counts.
Adjusted earnings per share of 94 cents outpaced the consensus mark by a penny and increased 27% year over year. Earnings were driven by strong organic growth, 2017 tax reform, contributions from acquisitions and lower share count, partially offset by increased depreciation and amortization, and interest expenses.
Total revenues of $581.2 million exceeded the consensus estimate by $16 million. The reported figure improved 15.6% year over year on a reported basis and 7% on an organic constant-currency basis.
In the quarter, Verisk Analytics witnessed strong organic constant-currency revenue growth across all of its reorganized business segments — Insurance, Energy and Specialized Markets, and Financial Services. Also, the company has a strong cash generating ability that helps Verisk Analytics to meet deleveraging objectives and invest on behalf of its shareholders.
In a year’s time, shares of Verisk Analytics have gained 29.8%, outperforming the industry’s 22.6% rally.
Let’s delve deeper into the numbers
Segmental Performance
Insurance segment revenues came in at $412.6 million, up 12.5% year over year on a reported basis and 8.7% on an organic constant-currency basis.
Within this segment, underwriting & rating revenues of $280.6 million was up 10.8% on a reported basis and 6.9% on an organic constant-currency basis. The improvement was primarily driven by strength in the company’s catastrophe modeling services and underwriting solutions. Claims revenues of $132 million improved 16.1% on a reported basis and 12.6% on an organic constant-currency basis. The uptick can be attributed to revenues from repair cost estimating solutions and claims analytics.
As energy business` end market continues to stabilize, Energy and Specialized Markets segment revenues were up 18.1% in the first quarter and 3.1% on an organic constant currency basis.
Revenues at the Financial Services segment increased 46.2% on a reported basis and 1.5% on an organic constant-currency basis. Strength across analytical products and media effectiveness solutions led to this improvement.
Operating income of $194.5 million increased 3.6% year over year. Operating margin of $33.5% contracted 390 basis points (bps) year over year.
EBITDA of $268.8 million increased 9.4% year over year on a reported basis and 7.4% on an organic constant-currency basis. Organic EBITDA margin of 49% contracted 10 bps from the year- ago level.
EBITDA expenses (cost of revenues; selling, general and administrative expenses; investment income and others) increased 21.6% in the quarter under review and 6.7% on an organic constant-currency basis. The year-over-year organic constant currency increase was primarily driven by increased salaries and benefits associated with innovation and business growth.
Balance Sheet and Cash Flow
Verisk Analytics exited the quarter with cash and cash equivalents balance of $149.8 million, up from $142.3 million in the fourth quarter of 2017. Long term debt was $2 billion down from $2.3 billion in the last report.
Net cash flow from operating activities was $327 million, up 2.9% from the prior quarter. Free cash flow was $283.8 million, up 1% sequentially.
The company repurchased 0.4 million shares for $40 million. As of Mar 31, 2018, the company had $326 million worth of shares remaining under its share repurchase authorization.
Investors interested in the broader Business Services sector are keenly awaiting earnings reports from key players like Gartner, Inc. (IT - Free Report) , The Dun & Bradstreet Corp. (DNB - Free Report) and Broadridge Financial Solutions Inc. (BR - Free Report) . Garter and Dun & Bradstreet will release first-quarter 2018 results on May 8 and May 9, respectively. Broadridge will report third-quarter fiscal 2018 numbers on May 8.
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Verisk (VRSK) Tops Q1 Earnings on Robust Organic Growth
Verisk Analytics, Inc. (VRSK - Free Report) reported impressive first-quarter 2018 results surpassing the Zacks Consensus Estimate on both counts.
Adjusted earnings per share of 94 cents outpaced the consensus mark by a penny and increased 27% year over year. Earnings were driven by strong organic growth, 2017 tax reform, contributions from acquisitions and lower share count, partially offset by increased depreciation and amortization, and interest expenses.
Total revenues of $581.2 million exceeded the consensus estimate by $16 million. The reported figure improved 15.6% year over year on a reported basis and 7% on an organic constant-currency basis.
In the quarter, Verisk Analytics witnessed strong organic constant-currency revenue growth across all of its reorganized business segments — Insurance, Energy and Specialized Markets, and Financial Services. Also, the company has a strong cash generating ability that helps Verisk Analytics to meet deleveraging objectives and invest on behalf of its shareholders.
In a year’s time, shares of Verisk Analytics have gained 29.8%, outperforming the industry’s 22.6% rally.
Let’s delve deeper into the numbers
Segmental Performance
Insurance segment revenues came in at $412.6 million, up 12.5% year over year on a reported basis and 8.7% on an organic constant-currency basis.
Within this segment, underwriting & rating revenues of $280.6 million was up 10.8% on a reported basis and 6.9% on an organic constant-currency basis. The improvement was primarily driven by strength in the company’s catastrophe modeling services and underwriting solutions. Claims revenues of $132 million improved 16.1% on a reported basis and 12.6% on an organic constant-currency basis. The uptick can be attributed to revenues from repair cost estimating solutions and claims analytics.
As energy business` end market continues to stabilize, Energy and Specialized Markets segment revenues were up 18.1% in the first quarter and 3.1% on an organic constant currency basis.
Revenues at the Financial Services segment increased 46.2% on a reported basis and 1.5% on an organic constant-currency basis. Strength across analytical products and media effectiveness solutions led to this improvement.
Verisk Analytics, Inc. Revenue (TTM)
Verisk Analytics, Inc. Revenue (TTM) | Verisk Analytics, Inc. Quote
Operating Performance
Operating income of $194.5 million increased 3.6% year over year. Operating margin of $33.5% contracted 390 basis points (bps) year over year.
EBITDA of $268.8 million increased 9.4% year over year on a reported basis and 7.4% on an organic constant-currency basis. Organic EBITDA margin of 49% contracted 10 bps from the year- ago level.
EBITDA expenses (cost of revenues; selling, general and administrative expenses; investment income and others) increased 21.6% in the quarter under review and 6.7% on an organic constant-currency basis. The year-over-year organic constant currency increase was primarily driven by increased salaries and benefits associated with innovation and business growth.
Balance Sheet and Cash Flow
Verisk Analytics exited the quarter with cash and cash equivalents balance of $149.8 million, up from $142.3 million in the fourth quarter of 2017. Long term debt was $2 billion down from $2.3 billion in the last report.
Net cash flow from operating activities was $327 million, up 2.9% from the prior quarter. Free cash flow was $283.8 million, up 1% sequentially.
The company repurchased 0.4 million shares for $40 million. As of Mar 31, 2018, the company had $326 million worth of shares remaining under its share repurchase authorization.
Zacks Rank & Upcoming Releases
Verisk Analytics currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Investors interested in the broader Business Services sector are keenly awaiting earnings reports from key players like Gartner, Inc. (IT - Free Report) , The Dun & Bradstreet Corp. (DNB - Free Report) and Broadridge Financial Solutions Inc. (BR - Free Report) . Garter and Dun & Bradstreet will release first-quarter 2018 results on May 8 and May 9, respectively. Broadridge will report third-quarter fiscal 2018 numbers on May 8.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>