Verisk Analytics Stock Now 27% Cheaper, Buy?
Verisk Analytics (VRSK) stock deserves your consideration. Why? Because you get high margins – reflective of pricing power and cash generation capacity – for a discounted price. Here is some data.
- Revenue Growth: Verisk Analytics saw growth of 7.3% LTM and 13.4% last 3 year average, but this is not a growth story
- Recent Profitability: Nearly 44.5% operating cash flow margin and 44.4% operating margin LTM.
- Long-Term Profitability: About 41.6% operating cash flow margin and 43.6% operating margin last 3 year average.
- Available At Discount: At P/S multiple of 10.1, VRSK stock is available at a 27% discount vs 1 year ago.
While revenue growth helps, this is not a growth perspective. Pricing power and high margins generate consistent, predictable profits and cash flows, which reduce risk and allow capital to be reinvested. Market tends to reward that.
As a quick background, Verisk Analytics provides predictive analytics and decision support solutions across insurance, energy, and financial services, including benchmarking, decision algorithms, and customized analytics for financial institutions and payment networks.
| VRSK | S&P Median | |
|---|---|---|
| Sector | Industrials | – |
| Industry | Research & Consulting Services | – |
| PS Ratio | 10.1 | 3.1 |
| PE Ratio | 33.3 | 23.7 |
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| LTM* Revenue Growth | 7.3% | 5.6% |
| 3Y Average Annual Revenue Growth | 13.4% | 5.3% |
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| LTM* Operating Margin | 44.4% | 18.8% |
| 3Y Average Operating Margin | 43.6% | 18.2% |
| LTM* Op Cash Flow Margin | 44.5% | 20.4% |
| 3Y Average Op Cash Flow Margin | 41.6% | 19.8% |
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| DE Ratio | 15.9% | 20.9% |
*LTM: Last Twelve Months
But do these numbers tell the full story? Read Buy or Sell VRSK Stock to see if Verisk Analytics still has an edge that holds up under the hood.
Love the VRSK stock? Great. But don’t get too attached. Stocks crash. High Quality Portfolio lets you navigate that risk.
Stocks Like These Can Outperform. Here Is Data
Here is how we make the selection: We consider stocks > $10 Bil in market cap, and then include those with high CFO (cash flow from operations) margins or operating margins. We additionally consider only those stocks that have meaningfully declined in valuation over the past 1 year.
Below are statistics for stocks with this selection strategy applied since 12/31/2016.
- Average 12-month forward returns of nearly 19%
- 12-month win rate (percentage of picks returning positive) of about 72%
But Consider The Risk
Verisk isn’t immune to sharp drops. It fell about 17% in the 2018 correction, nearly 29% during the Covid crash, and over 30% in the recent inflation shock. Even solid companies like this can face big sell-offs when the market turns. Good fundamentals matter, but steep dips still happen.
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.