Verisk (VRSK) Margin Decline Challenges Bullish Narratives Despite Shares Trading Below Fair Value

Verisk Analytics (VRSK) posted revenue growth forecasts of 7.8% per year, which is below the broader US market’s expectation of 10.3% per year. EPS is projected to rise 9.81% per year, also falling short of the 15.7% benchmark set by the US market. Meanwhile, the company reported a net profit margin of 30.2%, down from 33% last year, and has delivered 6.3% annual earnings growth over the past five years. These figures present investors with a mixed set of signals regarding growth and profitability.

See our full analysis for Verisk Analytics.

Next, we will see how these latest numbers compare to the strongest narratives shaping market sentiment and investor decisions.

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• Analysts forecast that profit margins will rise from 30.4% today to 31.5% in three years, signaling expected operational improvements beyond maintaining current levels.

• Analysts’ consensus narrative notes that Verisk’s investments in disciplined cost management and expanding data precision are expected to boost margins and profit.

  • Margin gains could enhance shareholder value by delivering higher EBITDA margins and more resilient profitability, which reinforces the company’s competitive edge.

  • Improved platform efficiency and real-time insights are positioned to support higher pricing power and client retention. This could translate to stronger margins within core insurance analytics.

• Verisk trades on a Price-To-Earnings Ratio of 33.2x, above the industry average of 25.3x but below the peer group average of 35.5x. Its current share price of $217.60 stands at a discount to the DCF fair value of $270.08.

• Analysts’ consensus view highlights that while Verisk commands a premium to the broader industry, its high-quality earnings profile and attractive discount to DCF fair value raise the prospect of relative undervaluation.

  • The current share price undercuts the DCF fair value by almost 19%, suggesting potential upside if investor confidence in margin expansion and future growth persists.

  • Despite industry headwinds, the consensus narrative underscores that disciplined capital management and expanding platforms could warrant a higher multiple versus less profitable rivals.

• Analyst expectations call for earnings to grow to $1.2 billion by 2028, up from $909.3 million, while shares outstanding are projected to decline by roughly 1.06% per year for the next three years.

• Analysts’ consensus narrative highlights Verisk’s dual focus on bottom-line growth and share count reduction.

  • Profit gains relative to a shrinking share base are positioned to lift earnings per share and enhance long-term shareholder returns when compared to rivals grappling with dilution or stagnant profits.

  • The consensus points to Verisk’s disciplined approach as supporting both absolute profit growth and per-share value. This sets it apart in a competitive sector.