Intrinsic Value Verisk Analytics, Inc. (0LP3.L)

• Previous Close: £214.25
• Intrinsic Value: £140.27
• Upside potential: -35%

Stock Valuation Context

Business Model And Market Position

Verisk Analytics, Inc. is a leading provider of data analytics and decision-support solutions, operating primarily in the insurance, energy, and financial services sectors. The company leverages predictive analytics, artificial intelligence, and machine learning to help clients manage risk, optimize operations, and enhance compliance. Its Insurance segment dominates the property and casualty market with tools for fraud detection, loss prediction, and underwriting efficiency, while the Energy and Specialized Markets segment offers critical insights for natural resources industries, including energy, chemicals, and renewables. The Financial Services segment supports financial institutions with benchmarking, fraud detection, and regulatory compliance solutions. Verisk’s proprietary datasets and analytical models create high switching costs, reinforcing its competitive moat. Its global footprint and sector-specific expertise position it as a trusted partner for data-driven decision-making in complex, regulated industries. The company’s ability to integrate vast datasets with advanced analytics ensures it remains a market leader, though competition from niche players and in-house solutions poses a moderate threat.

Revenue Profitability And Efficiency

Verisk reported $2.88 billion in revenue for the latest fiscal year, with net income of $958.2 million, reflecting a robust 33.3% net margin. The company’s operating cash flow of $1.14 billion underscores strong cash generation, while capital expenditures of $223.9 million indicate disciplined reinvestment. Its high profitability is driven by scalable analytics solutions and recurring revenue streams from subscription-based models.

Earnings Power And Capital Efficiency

Diluted EPS of $6.71 highlights Verisk’s earnings strength, supported by high-margin software and data services. The company’s capital efficiency is evident in its ability to convert revenue into free cash flow, which funds growth initiatives and shareholder returns. Its asset-light model minimizes capital intensity, allowing for consistent ROIC expansion.

Balance Sheet And Financial Health

Verisk maintains a solid balance sheet with $291.2 million in cash and equivalents, though total debt of $3.25 billion suggests moderate leverage. The company’s strong cash flow generation provides ample coverage for debt servicing and future investments. Its financial health remains stable, with no immediate liquidity concerns.

Growth Trends And Dividend Policy

Verisk has demonstrated steady growth through organic innovation and strategic acquisitions. A dividend of $1.62 per share signals a commitment to returning capital to shareholders, though the payout ratio remains conservative, allowing for reinvestment in high-return opportunities. The company’s focus on expanding its analytics capabilities in emerging markets and sectors like renewables supports long-term growth.

Valuation And Market Expectations

With a market cap of $43.7 billion, Verisk trades at a premium, reflecting its leadership in data analytics and predictable revenue streams. Investors likely price in sustained growth from digital transformation trends across its core markets. The beta of 0.898 suggests lower volatility relative to the broader market.

Strategic Advantages And Outlook

Verisk’s proprietary data assets, domain expertise, and scalable platforms provide durable competitive advantages. The company is well-positioned to capitalize on increasing demand for risk analytics, though regulatory scrutiny and competition from tech entrants warrant monitoring. Its outlook remains positive, driven by cross-selling opportunities and expansion into adjacent verticals.

Sources

Company filings, Bloomberg