Fundamental Analysis of Verisk Analytics, Inc. VRSK
In the last ten years, the stock has provided a return of 188%, an outperformance compared to SP500’s 133% return. Verisk is also in Warren Buffet’s portfolio.
Verisk Analytics provides data analytics to improve the decision-making process in:
- natural resources
- financial services
The Company has been delivering data, analytics, and decision support services for more than 45 years.
Verisk provides predictive analytics in order to help customers to make better decisions about various risks involved in their businesses. Each new customer feeds the company’s database and also helps to improve the analytics.
The Company’s analytic solutions and data are scalable, which leads, due to growing customer base, increasing profit margins, low cost, low capital intensity and highly cash generating business.
Therefore growing customer base gives Verisk competitive advantage in terms of better price and also in terms of better service.
The Company also makes acquisitions: 3E Company, Argus, and Maplecroft acquired to expand into financial services and supply chain verticals, Wood Mackenzie acquired to expand internationally in the global energy, chemicals, and metals and mining industries.
Verisk is continuously investing in its analytics solutions especially in First-to-Market Innovations to be the first in the new growth markets.
The Company focuses on first to market innovations as a part of its strategy to build an economic moat and later to use it to continuously grow. If Verisk gains the advantage of the first mover the company uses it for getting deeply embedded in clients workflow. Being deeply integrated into client’s decision-making process makes switching highly costly and the clients reluctant to switch to other service providers. The pricing power of Verisk confirms the high switching costs.
Deep integration in client’s workflow gives the company advantages to establish long-term relationship and expertise with each client which feeds company’s database and improves its analytics.
Because of this Strategy of Verisk “build once, sell many times”, 80%+ of total revenue is subscription and long-term contracts.
Increasing Customer base and very little incremental cost to add a new customer make Verisk’s business more and more profitable and competitive.
Verisk’s clients are located primarily in the United States, therefore, the Company is exposed too much to country-specific Risks.
Verisk’s acquired businesses are not profitable as its core business.
(1) The Company will continue to widen its economic moat which is already wide enough.
(2) Verisk will keep its double-digit revenue growth and high-profit margins but mainly in the USA.
For the List of Corporate Analysis, click here
For the List of Technical Analysis, click here
No Investment or Financial Advice.
GET UPDATES VIA EMAIL
Sign up Now
You can unsubscribe at any time.