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Last update on 2024-06-05

Verisk Analytics (VRSK) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

Discover Verisk Analytics (VRSK) financial strength through Piotroski F-Score analysis with a strong score of 7/9 for 2023. Learn more about profitability and liquidity.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 7

We're running Verisk Analytics (VRSK) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
1
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
0
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
0
Current Ratio is growing?
1
Number of shares not diluted?
1
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
1

The Piotroski F-Score is a helpful tool for evaluating a company's financial health. The score ranges from 0 to 9, with higher scores indicating stronger financial positions. Verisk Analytics (VRSK) scored a 7, reflecting good profitability, liquidity, and operational efficiency. VRSK has shown positive net income and operational cash flow, strong return on assets, and higher operating cash flow compared to net income. While the company’s leverage has recently increased, its current ratio and asset turnover have improved. Additionally, a decrease in the number of outstanding shares and growing gross margins are positive signs.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski F-Score of 7, Verisk Analytics (VRSK) appears to be a strong and potentially undervalued investment. The company's consistent profitability, robust cash flow, and improved asset management are promising. However, the increase in leverage should be monitored. Overall, it's worth considering Verisk Analytics (VRSK) for investment, especially if you are looking for a financially stable company with good long-term growth potential.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Verisk Analytics (VRSK)

Company has a positive net income?

Net income is a critical metric as it indicates the profitability of a company. Positive net income signifies that the company is operating profitably.

Historical Net Income of Verisk Analytics (VRSK)

Verisk Analytics (VRSK) has reported a positive net income of $614.4 million for the year 2023. This marks a net positive situation for the company, thus adding 1 point in the Piotroski analysis. Historically, since 2007, VRSK has shown a trend of positive net income consistently, except for some initial data unavailable for 2006. The positive trend over the years—peaking at $954.3 million in 2021 and being consistently above $400 million from 2014 onwards—demonstrates steady profitability, highlighting the company's efficient management and operational stability.

Company has a positive cash flow?

Cash Flow from Operations (CFO) reflects the cash a company generates from its normal business operations, which indicates its ability to generate sufficient positive cash flow to maintain and grow operations.

Historical Operating Cash Flow of Verisk Analytics (VRSK)

For Verisk Analytics (VRSK), the CFO in 2023 is positive, totaling $1,060,700,000. This is a positive trend and adds 1 point in the Piotroski F-score context. Reviewing historical data over the last 20 years, the CFO has consistently risen, highlighting a strong operational cash flow. The company's ability to continuously generate positive operational cash flow is a testament to its robust business model and operational efficiency, which is vital for its sustainability and growth. Thus, maintaining a positive cash flow from operations is indicative of strong financial health and operational performance.

Return on Assets (ROA) are growing?

Explain the criterion for Verisk Analytics (VRSK) and why it is important to consider

Historical change in Return on Assets (ROA) of Verisk Analytics (VRSK)

For Verisk Analytics (VRSK), the 'Change in ROA' criterion involves analyzing the Return on Assets (ROA) between two consecutive years to determine if the company has become more effective at generating profit from its assets. The ROA is an essential profitability metric that indicates how efficiently a company can convert its assets into net income. An increase in ROA suggests improved profitability and operational efficiency, which can be particularly appealing to investors seeking sustainable growth. Conversely, a decrease may signal potential issues in asset utilization or profitability.

Operating Cashflow are higher than Netincome?

Operating Cash Flow being higher than Net Income reflects strong cash-generating capability and indicates the company's earnings are of high quality.

Historical accruals of Verisk Analytics (VRSK)

In 2023, Verisk Analytics (VRSK) recorded an Operating Cash Flow of $1,060,700,000, significantly higher than its Net Income of $614,400,000. This disparity is a positive indicator, suggesting robust cash generation capability. Historically, VRSK displays a consistent pattern: operating cash flow has outpaced net income in many years, implicating high earnings quality. This criterion scores a 1, as the operating cash flow surpasses the net income, showcasing financial health and stability.

Liquidity of Verisk Analytics (VRSK)

Leverage is declining?

Change in leverage evaluates the level of a company’s debt relative to its equity. A reduction suggests better financial health and solvency.

Historical leverage of Verisk Analytics (VRSK)

Verisk Analytics has seen its leverage increase from 0.3639 in 2022 to 0.6981 in 2023. Consequently, no point is added under the Piotroski criteria for leverage. Historically, the company’s leverage has seen fluctuations, reaching a high of 0.714 in 2011. The increase in leverage to 0.6981 in 2023 suggests a higher level of debt relative to equity, potentially indicating greater financial risk or capital investments funded by debt. This increasing trend is concerning, especially as it reverses the downward trend observed around 2021 when leverage was 0.3297.

Current Ratio is growing?

The Current Ratio measures a company's ability to pay short-term obligations with its short-term assets. A higher Current Ratio indicates better liquidity and financial health.

Historical Current Ratio of Verisk Analytics (VRSK)

For Verisk Analytics (VRSK), the Current Ratio has significantly increased from 0.3989 in 2022 to 1.0502 in 2023. This notable improvement is a positive sign as it suggests a stronger liquidity position, making it more capable of covering its short-term liabilities. Looking at historical data, this is the highest current ratio the company has recorded in the past 20 years, well surpassing its previous levels. However, it should be noted that the company's ratio still lags behind the industry median of 1.2211 for 2023, which indicates that despite the improvement, there remains room for further enhancement in relative terms within its industry. Thus, based on this metric alone, Verisk deserves 1 point for the year 2023.

Number of shares not diluted?

Change in shares outstanding is crucial because it affects per-share metrics and indicates management's financing strategies.

Historical outstanding shares of Verisk Analytics (VRSK)

Verisk Analytics' outstanding shares decreased from 157,905,718 in 2022 to 146,623,989 in 2023. This represents a reduction of approximately 7.18%. The decrease in shares outstanding is a positive indicator from a Piotroski analysis perspective, earning a score of 1. A lower number of shares boosts metrics like earnings per share (EPS), making the company more appealing to investors. This strategic move can be seen positively especially given the long-term trend of fluctuating but generally consistent share counts over the past 20 years.

Operating of Verisk Analytics (VRSK)

Cross Margin is growing?

Change in Gross Margin looks at the year-over-year change in an entity's profit after the cost of goods sold.

Historical gross margin of Verisk Analytics (VRSK)

For Verisk Analytics (VRSK), the gross margin in 2023 is 0.6731, compared to 0.6698 in 2022. This marks an increment of 0.31%, which is a positive indicator, meriting 1 point. From an historical lens, Verisk's gross margin has shown consistent improvement over the past two decades, exceeding the industry median gross margin. Such a trend underscores the company's commendable cost control measures and its strong competitive positioning.

Asset Turnover Ratio is growing?

Asset turnover is a financial ratio that measures the efficiency of a company's use of its assets to generate sales revenue. It is important because it gives insights into how well the company is managing its assets.

Historical asset turnover ratio of Verisk Analytics (VRSK)

The Asset Turnover of Verisk Analytics (VRSK) increased from 0.3381 in 2022 to 0.4734 in 2023. This rise signifies a notable improvement in the company's efficiency in using its assets to generate revenue. Historically, the asset turnover ratio for Verisk Analytics has shown a downward trend from a high of 1.9329 in 2007 to a low of 0.3105 in 2020. The rebound in 2023, reaching 0.4734, suggests that the company has made significant strides in managing its assets more effectively. Therefore, we add 1 point for this criterion.


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