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Higher Analytics Revenues to Drive Verisk (VRSK) Q4 Earnings

Business information services firm Verisk Analytics, Inc.VRSK is scheduled to report fourth-quarter 2017 results after the closing bell on Feb 20. The company is likely to report higher revenues due to improved demand for its products.

Whether this will lead to higher earnings remains to be seen.

Top-Line Improvement

Using advanced technologies to collect and analyze troves of data, Verisk draws on unique data assets and deep domain expertise to provide predictive analytics and decision support solutions that are integrated into customer workflows. These help its customers to take informed decisions with greater precision, efficiency and discipline about various risks involved in the businesses. In order to create long-term value for its clients, the company has extended its scalable data and analytic solutions by steadily putting resources into overseas markets. The scalability of its products has further led to highly cash-generative businesses characterized by high net margins and relatively low capital intensity.

Verisk has a recurring revenue stream, with 75% of its total revenues generated through subscription and long-term contracts. In addition, the company has a large and diverse addressable market with low customer concentration that mitigates operating risks. Operating in an industry with high barriers to entry, Verisk has an integrated research, sales & marketing, and consulting model designed to best serve its clients' needs. This enables it to offer a steady stream of first-to-market innovations that provide a competitive advantage against its rivals.

The Zacks Consensus Estimate for Decision Analytics segment revenues is pegged at $358 million, up from $324 million reported in the year-ago quarter. Revenues from Risk Assessment segment are expected to be $195 million compared with reported revenues of $183 million in the year-earlier quarter. Total revenues are likely to improve to $554 million from $506 million recorded in the year-ago quarter.

Other Key Factors

During the quarter, Verisk inked a definitive agreement to acquire PowerAdvocate in order to augment its presence in the energy sector. The deal will add to Verisk's existing pool of customers, giving it greater access to the global markets. The company, with PowerAdvocate's proprietary data set, encompassing $2.7 trillion of spending data and machine-learned methods, will provide customers with unique insight to increase profitability.

Our proven model conclusively shows that Verisk is likely to beat earnings this quarter as it possesses 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 perfectly the case here as you will see below:

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +2.59% as the former is pegged at 79 cents and the latter at 77 cents. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Verisk Analytics, Inc. Price and EPS Surprise

Verisk Analytics, Inc. Price and EPS Surprise | Verisk Analytics, Inc. Quote

Zacks Rank: Verisk has a Zacks Rank #3. This increases the predictive power of ESP and makes us reasonably confident of an earnings beat.

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 a negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Sonic Automotive, Inc. SAH has an Earnings ESP of +2.42% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .

Magna International, Inc. MGA has an Earnings ESP of +1.27% and a Zacks Rank #3.

Atlas Air Worldwide Holdings, Inc. AAWW has an Earnings ESP of +0.48% and a Zacks Rank #2.

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Verisk Analytics, Inc. (VRSK): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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