Is Verisk Analytics Now Fairly Priced After Strategic Refocus On Core Insurance Analytics

• Wondering if Verisk Analytics is finally trading at a price that makes sense, or if the recent share moves are just noise in a data heavy story?
• The stock has inched up about 0.4% over the last week and 4.4% in the last month, but that comes after a tough stretch with shares still down 17.8% year to date and 22.4% over the past year, even though the three year and five year returns remain positive at 25.2% and 19.9% respectively.
• Recently, investors have been digesting updates around Verisk's strategic focus on core insurance analytics, including the ongoing effects of prior divestitures that sharpened its niche as a data and risk intelligence specialist. That renewed focus has kept attention on how durable its subscription like revenue is in an environment where risk, regulation, and climate related data are increasingly in demand.
• On our framework, Verisk scores a 2 out of 6 on undervaluation checks. This suggests that while the stock is not extremely cheap, parts of the market may still be underestimating its cash generation and pricing power. Next, we will walk through the usual valuation tools investors often use, and then finish with a more nuanced way to think about what Verisk is really worth.

Verisk Analytics scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Verisk Analytics Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates what a company is worth by projecting the cash it can generate in the future and discounting those cash flows back to today. For Verisk Analytics, the model uses a 2 stage Free Cash Flow to Equity approach, based on cash flow projections in $.

Verisk’s latest twelve month free cash flow is about $1.09 billion, and analysts expect this to grow steadily over the next decade. Projections rise from roughly $1.09 billion in 2026 to about $2.18 billion by 2035, with near term forecasts informed by analyst estimates and later years extrapolated by Simply Wall St. Each of these future cash flows is discounted back to today to reflect risk and the time value of money.

Combining all discounted cash flows, the model produces an intrinsic value of about $266.93 per share. On this view, the stock is around 15.8% below its current market price.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Verisk Analytics is undervalued by 15.8%. Track this in your watchlist or portfolio, or discover 930 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Verisk Analytics.

Approach 2: Verisk Analytics Price vs Earnings

For profitable, mature businesses like Verisk, the price to earnings (PE) ratio is a useful way to judge valuation because it links what investors pay today directly to the profits the company is already generating. The higher the expected growth and the lower the perceived risk, the more investors are usually willing to pay, which translates into a higher “normal” or “fair” PE multiple.

Verisk currently trades on a PE of about 34.26x. That is above the broader Professional Services industry average of roughly 24.31x, but slightly below the peer group average of around 36.63x. To refine this view, Simply Wall St calculates a proprietary “Fair Ratio” of 29.29x, which is the PE one might expect for Verisk after accounting for its earnings growth outlook, margins, risk profile, industry, and market capitalization.

This Fair Ratio provides a more tailored benchmark than simple peer or industry comparisons, because it adjusts for the specific qualities that make Verisk different from other firms. Comparing the current 34.26x PE to the 29.29x Fair Ratio suggests the shares are trading at a premium to what those fundamentals justify.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Verisk Analytics Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives, a simple way to connect your view of Verisk Analytics’ future with a concrete forecast and fair value. You can do this by telling the story behind your assumptions for revenue, earnings and margins, and then comparing that fair value to today’s price to decide whether to buy, hold or sell. Narratives on Simply Wall St’s Community page are easy to create and update. They automatically refresh when new information like earnings or news is released. They also make it clear how different perspectives lead to different conclusions. For example, one investor might believe Verisk’s AI and platform investments justify a higher fair value and upside from the current price. Another, more cautious investor, focused on slowing organic growth and execution risks, might assign a lower fair value that implies limited upside or even downside at the same share price.

Do you think there's more to the story for Verisk Analytics? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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