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Verisk Analytics (VRSK) Misses on Q4 Earnings, Beats Revenues
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Verisk Analytics, Inc.’s (VRSK - Free Report) fourth-quarter 2018 earnings missed the Zacks Consensus Estimate, while revenues beat the same.
Adjusted EPS of $1.04 missed the consensus estimate by 2 cents and declined 21.8% on a year-over-year basis. Quarterly revenues of $613.9 million beat the consensus mark by $4 million and improved 7.7% year over year on a reported basis. The figure improved 5.4% year over year on an organic constant-currency (cc) basis.
The stock gained 28.2% in the past year compared with the industry’s rise of 8.5%.
Let’s check the numbers.
Segmental Performance
Insurance segment revenues totaled $436.2 million, up 8% year over year on a reported basis and 5% at organic cc.
In the segment, underwriting and rating revenues of $289.9 million rose 7.4% on a reported basis and 6.9% at organic cc. The improvement was primarily driven by strength in the company’s catastrophe modeling services and underwriting solutions. Claims revenues amounted to $146.3 million, which improved 8% on a reported basis and 5% at organic cc. The uptick can be attributed to revenues from repair cost estimating solutions and claims analytics.
As energy business’ end market continues to improve, Energy and Specialized Markets segment revenues amounted to $130.2 million and improved 11.7% on a reported basis and 4.1% at organic cc. The improvement can also be attributed to revenues from environmental health and safety services, weather and climate analytics businesses as well as growth in consulting and research businesses.
Financial Services segment revenues totaled $47.5 million, which slipped 1.8% on a reported basis and 2.8% at organic cc. The downside was primarily caused by headwinds from tough comparisons with prior-year implementation revenues as well as some timing differences.
Operating Results
Adjusted EBITDA of $289.1 million increased 6.1% on a reported basis and 4.2% at organic cc. Adjusted EBITDA margin was 47.8% compared with 48.4% in the prior-year quarter.
Adjusted EBITDA expenses (cost of revenues; selling, general and administrative expenses; investment income and others) increased 9.1% on a reported basis and 6.4% at organic cc. The upside can be attributed to increased salaries and benefits associated with innovation and business growth of remote imagery business.
Operating income in the fourth quarter was $216.2 million compared with $210.1 million in the prior-year quarter. Operating margin was 35.2% compared with 36.8% in the year-ago quarter.
Balance Sheet and Cash Flow
Verisk exited fourth-quarter 2018 with cash and cash equivalents of $139.5 million compared with $147.6 million in the prior quarter. Long-term debt at the end of the quarter was $2.1 billion compared with $2 billion at the end of the previous quarter.
The company generated $173.4 million of cash from operating activities and spent $76.5 million on Capex. Free cash flow was $96.9 million.
During the quarter, the company repurchased 1.3 million shares for $156 million. It also entered into a $75-million accelerated share repurchase (ASR) agreement. The shares repurchased will be delivered in March 2018. As of Dec 31, 2018, the company had $428 million under its share repurchase authorization.
The company has declared dividend for the first time in its history. A cash dividend of 25 cents per share is payable on March 29, 2019, to the shareholders of record as of March 15, 2019.
A few better-ranked stocks in the Zacks Business Services sector are Automatic Data Processing, Inc (ADP - Free Report) , Information Services Group, Inc (III - Free Report) and Omnicom Group Inc (OMC - Free Report) , each carrying a Zacks Rank #2 (Buy).
The long-term expected EPS (three to five years) growth rate for Automatic Data Processing, Information Services Group and Omnicom is 12.8%, 14% and 6.9%, respectively.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
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Verisk Analytics (VRSK) Misses on Q4 Earnings, Beats Revenues
Verisk Analytics, Inc.’s (VRSK - Free Report) fourth-quarter 2018 earnings missed the Zacks Consensus Estimate, while revenues beat the same.
Adjusted EPS of $1.04 missed the consensus estimate by 2 cents and declined 21.8% on a year-over-year basis. Quarterly revenues of $613.9 million beat the consensus mark by $4 million and improved 7.7% year over year on a reported basis. The figure improved 5.4% year over year on an organic constant-currency (cc) basis.
The stock gained 28.2% in the past year compared with the industry’s rise of 8.5%.
Let’s check the numbers.
Segmental Performance
Insurance segment revenues totaled $436.2 million, up 8% year over year on a reported basis and 5% at organic cc.
In the segment, underwriting and rating revenues of $289.9 million rose 7.4% on a reported basis and 6.9% at organic cc. The improvement was primarily driven by strength in the company’s catastrophe modeling services and underwriting solutions. Claims revenues amounted to $146.3 million, which improved 8% on a reported basis and 5% at organic cc. The uptick can be attributed to revenues from repair cost estimating solutions and claims analytics.
As energy business’ end market continues to improve, Energy and Specialized Markets segment revenues amounted to $130.2 million and improved 11.7% on a reported basis and 4.1% at organic cc. The improvement can also be attributed to revenues from environmental health and safety services, weather and climate analytics businesses as well as growth in consulting and research businesses.
Financial Services segment revenues totaled $47.5 million, which slipped 1.8% on a reported basis and 2.8% at organic cc. The downside was primarily caused by headwinds from tough comparisons with prior-year implementation revenues as well as some timing differences.
Operating Results
Adjusted EBITDA of $289.1 million increased 6.1% on a reported basis and 4.2% at organic cc. Adjusted EBITDA margin was 47.8% compared with 48.4% in the prior-year quarter.
Adjusted EBITDA expenses (cost of revenues; selling, general and administrative expenses; investment income and others) increased 9.1% on a reported basis and 6.4% at organic cc. The upside can be attributed to increased salaries and benefits associated with innovation and business growth of remote imagery business.
Verisk Analytics, Inc. Revenue (TTM)
Verisk Analytics, Inc. Revenue (TTM) | Verisk Analytics, Inc. Quote
Operating income in the fourth quarter was $216.2 million compared with $210.1 million in the prior-year quarter. Operating margin was 35.2% compared with 36.8% in the year-ago quarter.
Balance Sheet and Cash Flow
Verisk exited fourth-quarter 2018 with cash and cash equivalents of $139.5 million compared with $147.6 million in the prior quarter. Long-term debt at the end of the quarter was $2.1 billion compared with $2 billion at the end of the previous quarter.
The company generated $173.4 million of cash from operating activities and spent $76.5 million on Capex. Free cash flow was $96.9 million.
During the quarter, the company repurchased 1.3 million shares for $156 million. It also entered into a $75-million accelerated share repurchase (ASR) agreement. The shares repurchased will be delivered in March 2018. As of Dec 31, 2018, the company had $428 million under its share repurchase authorization.
The company has declared dividend for the first time in its history. A cash dividend of 25 cents per share is payable on March 29, 2019, to the shareholders of record as of March 15, 2019.
Zacks Rank & Upcoming Releases
Verisk Analytics currently has a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A few better-ranked stocks in the Zacks Business Services sector are Automatic Data Processing, Inc (ADP - Free Report) , Information Services Group, Inc (III - Free Report) and Omnicom Group Inc (OMC - Free Report) , each carrying a Zacks Rank #2 (Buy).
The long-term expected EPS (three to five years) growth rate for Automatic Data Processing, Information Services Group and Omnicom is 12.8%, 14% and 6.9%, respectively.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
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