Verisk Analytics (VRSK) Q2 Earnings: What’s in the Cards?

Verisk Analytics, Inc. VRSK is scheduled to report second-quarter 2018 results on Jul 31, 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 strong organic growth, 2017 tax reform policy (Tax Cuts and Jobs Act) and contributions from acquisition.

In the past six months, shares of Verisk have gained 15.6%, outperforming the 12.8% rise of the industry it belongs to.

Let’s check out the expectations in detail.

Strength Across Segments to Boost the Top Line

The Zacks Consensus Estimate for second-quarter revenues is pegged at $586.2 million, indicating a 12.1% year-over-year increase. The top line is expected to benefit from solid revenue growth across all the 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 revenues from repair cost estimating solutions and claims analytics.

Stabilization of the energy business end market is likely to improve Energy and Specialized Markets revenues. Growth across analytical products and media effectiveness solutions are expected to boost revenues at the Financial Services.

In first-quarter 2018, revenues increased 15.6% year over year on a reported basis and 7% on an organic constant-currency basis to $581.2 million. Organic growth was 8.3%.

Bottom Line Likely to Grow Year Over Year

The Zacks Consensus Estimate for earnings per share (EPS) in the to-be-reported quarter is pegged at $1.01, indicating year-over-year growth of 23.2%. 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 first-quarter 2018, adjusted earnings increased 27% to 94 cents per share.

Our Model Doesn’t Suggest a Beat

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 an Earnings ESP of -1.37% and a Zacks Rank #2. Though Verisk carries a favorable Zacks Rank, its negative Earnings ESP makes surprise prediction difficult.

Key Picks

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 second-quarter 2018:

Avis Budget Group CAR has an Earnings ESP of +5.17% and a Zacks Rank of 1. The company is scheduled to report quarterly numbers on Aug 7. You can see the complete list of today’s Zacks #1 Rank stocks here.

Fiserv FISV has an Earnings ESP of +0.94% and a Zacks Rank #3. The company is slated to report quarterly results on Jul 31.

First Date FDC has an Earnings ESP of +0.45% and a Zacks Rank #3. The company is slated to report quarterly numbers on Jul 30.

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