VRSK Verisk Analytics
Irreplaceable insurance data moat, but the stock is priced for perfection the fundamentals don't justify.
The story
Verisk owns the insurance industry's statistical and actuarial data backbone (ISO forms, loss costs, catastrophe models, claims analytics). Carriers can't easily replace it, so it has pricing power and very high margins. After exiting energy, financial and marketing data, it is a focused mature compounder growing high single digits, but the stock prices in more durability and reinvestment efficiency than the reported numbers show.
No material facts changed since June: TTM revenue growth (~7%) and 43.2% operating margin match the prior drivers, so all four are kept. Margin stays at current sustainable levels rather than the divestiture-inflated 56% peak, and sales-to-capital stays near the reported 0.62, which is depressed by acquisition goodwill. The 10-year horizon reflects a real moat but a maturing core insurance market rather than a 15-year runway.
Value drivers
| Revenue growth (Y1) | 7.0% |
| Terminal growth | 3.0% |
| Forecast horizon | 10y |
| Target operating margin | 43.5% |
| Years to target margin | 7 |
| Sales-to-capital | 0.65 |
| Beta | 0.95 |
| Failure probability | 1.0% |
| Cost of capital (WACC) | 8.7% |
| Terminal WACC | 8.9% |
Valuation bridge
| PV of explicit FCFF | 7.06B |
| PV of terminal value | 10.48B |
| Equity value | 14.86B |
| ÷ shares → per share | $114.17 |
News
bearish -0.30 · 8 articles
- Verisk Analytics (VRSK) Positions Well for Long-Term Expansion
- Verisk Analytics Inc's Dividend Analysis
- Verisk Analytics Stock: Is VRSK Underperforming the Industrials Sector?
- 1 Mid-Cap Stock on Our Watchlist and 2 We Avoid
- Verisk Analytics (VRSK) Stock May Be Undervalued On Cash Flow, Overvalued On Earnings
- Is Verisk Analytics (VRSK) Undervalued On Its New Catastrophe Loss Report?
- How Investors Are Reacting To Verisk Analytics (VRSK) Raising Its Global Catastrophe Loss Benchmark To $171 Billion
- Verisk (VRSK) Down 4.7% Since Last Earnings Report: Can It Rebound?
Projected free cash flow to the firm
| Yr | Revenue | Growth | Margin | NOPAT | Reinvest | FCFF | PV |
|---|---|---|---|---|---|---|---|
| 1 | 3.36B | 7.0% | 43.2% | 1.12B | 337.72M | 786.96M | 724.06M |
| 2 | 3.58B | 6.6% | 43.3% | 1.20B | 338.42M | 861.27M | 729.11M |
| 3 | 3.79B | 6.1% | 43.3% | 1.27B | 336.16M | 938.21M | 730.77M |
| 4 | 4.01B | 5.7% | 43.4% | 1.35B | 330.76M | 1.02B | 729.02M |
| 5 | 4.22B | 5.2% | 43.4% | 1.42B | 322.09M | 1.10B | 723.88M |
| 6 | 4.42B | 4.8% | 43.5% | 1.49B | 310.07M | 1.18B | 715.45M |
| 7 | 4.61B | 4.3% | 43.5% | 1.56B | 294.66M | 1.26B | 703.82M |
| 8 | 4.79B | 3.9% | 43.5% | 1.62B | 275.90M | 1.34B | 688.27M |
| 9 | 4.96B | 3.4% | 43.5% | 1.67B | 253.87M | 1.42B | 669.98M |
| 10 | 5.10B | 3.0% | 43.5% | 1.72B | 228.73M | 1.49B | 649.17M |
Key risks
- Insurer consolidation and budget pressure slowing pricing escalators
- Integration or overpayment risk in acquisitions (the failed XactAware/AccuLynx-type deals) and higher leverage at 4.9B gross debt
- Multiple compression if growth stays in high single digits against a premium valuation
Catalysts
- Catastrophe modeling and climate-risk analytics demand after heavy loss years
- Extended-reach and AI-driven claims products lifting organic growth above 8%