Is Verisk Analytics (VRSK) Overvalued Despite Its Buy Rating from Analysts?

Verisk Analytics may be overvalued with mixed growth prospects, but the 14 analysts following the company give it an average rating of buy. The analysts have set target prices ranging from $167.0 to $220.0 per share, for an average of $195.29. At today's price of $186.35, Verisk Analytics is trading -4.58% away from its average target price, suggesting there is an analyst consensus of some upside potential.

Verisk Analytics, Inc. is an American data analytics and risk assessment firm based in Jersey City, New Jersey, with customers in insurance, natural resources, financial services, government, and risk management sectors. The large-cap Consumer Discretionary company is based in Jersey City, NJ. Verisk Analytics has offered a 0.72% dividend yield over the last 12 months.

Verisk Analytics has a trailing twelve month P/E ratio of 26.89, compared to an average of 22.33 for the Consumer Discretionary sector. Based on its EPS guidance of 6.38, the company has a forward P/E ratio of 29.21.

Furthermore, Verisk Analytics is likely overvalued compared to its book value, since its P/B ratio of 14.39 is higher than the sector average of 3.12. The company's shares are currently trading 468.66% above their Graham number, implying that they are overvalued in terms of earnings and book value.

If analysts are giving the the company a decent rating despite its hefty price point, it could be related to its strong cash flows. Furthermore, Verisk Analytics has wide margins as you can see in the financial summary below.

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $2,477 $2,646 $2,872 $2,359
Revenue Growth n/a 6.83% 8.53% -17.86%
Gross Margins 60.57% 62.44% 63.17% 65.05%
Gross Margins Growth n/a 3.09% 1.17% 2.98%
Operating Margins 28.13% 39.23% 31.74% 59.62%
Operating Margins Growth n/a 39.46% -19.09% 87.84%
Earnings Per Share $2.76 $4.38 $4.12 $6.17
EPS Growth n/a 58.7% -5.94% 49.76%
Diluted Shares (MM) 163 163 162 155
Free Cash Flow (MM) $740 $821 $887 $784
FCF Growth n/a 11.08% 8.02% -11.61%
Capital Expenditures (MM) $217 $247 $268 $275
LT Debt to Equity 1.39 1.2 1.18 2.14
The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.