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Verisk (VRSK) Q3 Earnings: Is Disappointment in the Cards?

Verisk Analytics, Inc.VRSK is scheduled to report third-quarter 2018 results on Oct 30, after market close.

While we expect the company's top line to do well on the back of segmental strength, the bottom line is likely to be positively impacted by solid organic growth, 2017 tax reform policy (Tax Cuts and Jobs Act) and contributions from acquisition.

So far this year, shares of Verisk have gained 18%, significantly outperforming the 8.4% rally of the industry it belongs to and 2.6% rise of the Zacks S&P 500 Composite Index.

Let's check out the expectations in detail.

Segmental Growth to Drive Top Line

The Zacks Consensus Estimate for third-quarter revenues is pegged at $599.87 million, indicating a 9.3% year-over-year increase. The top line is expected to benefit from solid revenue growth across all the three segments - Insurance, Energy and Specialized Markets and Financial Services. The segments are also expected to improve organically as well as on an organic constant-currency basis.

Insurance segment revenues are expected to be driven by strength across its two units - Underwriting & rating and Claims. While strength in the company's catastrophe modeling services and underwriting solutions should boost Underwriting & rating revenues, Claims top line is likely to benefit from repair cost estimating solutions, claims analytics and aerial imagery solutions revenues.

Improvement in the energy business's end market, favorable currency movement and growth in environmental health and safety services revenues are likely to drive Energy and Specialized Markets segment.

The Financial Services segment is likely to get a boost from rise in enterprise data management and portfolio management solutions revenues.

Verisk Analytics, Inc. Revenue (TTM)

Verisk Analytics, Inc. Revenue (TTM) | Verisk Analytics, Inc. Quote

In second-quarter 2018, revenues increased 14.9% year over year on a reported basis, 8.3% organically and 7.4% on an organic constant-currency basis.

Bottom Line to Improve Year Over Year

The Zacks Consensus Estimate for earnings per share (EPS) in the to-be-reported quarter is pegged at $1.07, indicating year-over-year growth of 27.4%. Strong organic growth, 2017 tax reform policy (Tax Cuts and Jobs Act) and contributions from acquisitions are likely to boost the company's bottom line.

In second-quarter 2018, adjusted earnings increased 29.3% year over year.

What Our Model Says

Please note that according to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP . Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided, especially if the companies are witnessing negative estimate revisions. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Verisk has a Zacks Rank #4 and an Earnings ESP of -0.08%.

Verisk Analytics, Inc. Price and EPS Surprise

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

Stocks to Consider

Here are a few stocks from the broader Business Services sector that investors may consider as our model shows that these have the right combination of elements to beat on earnings in third-quarter 2018:

Clean Harbors CLH has an Earnings ESP of +7.98% and a Zacks Rank #1. The company is slated to release results on Oct 31. You can see the complete list of today's Zacks #1 Rank stocks here.

WEX WEX has an Earnings ESP of +0.49% and a Zacks Rank #2. The company is scheduled to report results on Oct 31.

ICF International ICFI has an Earnings ESP of +0.25% and a Zacks Rank #2. The company is slated to release results on Nov 1.

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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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