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Why Is Verisk (VRSK) Up 6.9% Since Last Earnings Report?

It has been about a month since the last earnings report for Verisk Analytics (VRSK). Shares have added about 6.9% in that time frame, outperforming the S&P 500.

Will the recent positive 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 catalysts.

Verisk Surpasses Q1 Estimates

Verisk Analytics Inc. reported better-than-expected first-quarter 2023 results.

Adjusted earnings (excluding 92 cents from non-recurring items) were $1.29 per share, beating the Zacks Consensus Estimate by 9.3% and our estimates by 10.3%. This was due to strong segmental revenue growth and core operating leverage. Adjusted earnings decreased 3.7% on a year-over-year basis.

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Total revenues of $651.6 million surpassed the consensus estimate by 3.1% and our estimate by 3.4% but decreased 16% from the year-ago figure. The reduced top line can be correlated to the sale of the company’s environmental health and safety business ("3E") and the Financial Services segment.

Segment Details

The Insurance segment’s revenues grew 11.1% on a reported basis and 9.8% on an OCC basis in the first quarter.

Underwriting and rating revenues saw an uptick of 10.7% to $460.5 million. Claim revenues increased to $191.1 million, indicating an increase of 12.1% on a year-over-year basis.

With the Energy and Specialized Markets segment qualified as discontinued operations, no revenues were reported from the segment. Verisk Financial Services was sold in April 2022 and no revenues for the segment are accounted for.

Adjusted EBITDA grew 4.1% on a year-over-year basis to $340.3 million. The adjusted EBITDA margin was at 52.2%, increasing 210 basis points from the year-ago figure.

Net cash generated from operating activities was $365.3 million. The free cash flow generated during the quarter was $304.1 million.

2023 Guidance

The company expects revenues to be in the range of $2.59-$2.63 billion. Adjusted EBITDA is expected to be in the band of $1.37-$1.42 billion. Adjusted EBITDA margin is expected to be in the band of 53-54%. Adjusted earnings per share is estimated to be between $5.2 and $5.5.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

VGM Scores

Currently, Verisk has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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 upward for the stock, and the magnitude of these revisions looks promising. Notably, Verisk has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Verisk is part of the Zacks Business - Information Services industry. Over the past month, S&P Global (SPGI), a stock from the same industry, has gained 6.2%. The company reported its results for the quarter ended March 2023 more than a month ago.

S&P Global reported revenues of $3.16 billion in the last reported quarter, representing a year-over-year change of +32.3%. EPS of $3.15 for the same period compares with $2.89 a year ago.

S&P Global is expected to post earnings of $3.07 per share for the current quarter, representing a year-over-year change of +9.3%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.3%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for S&P Global. Also, the stock has a VGM Score of D.

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