Verisk (VRSK) Augments UK Footprint With Sequel Acquisition

Leading data analytics provider Verisk Analytics, Inc. (NASDAQ:VRSK) recently inked a definitive agreement to acquire Sequel, a premier insurance and reinsurance software specialist based in London, for £250 million. The transaction is likely to close in third-quarter 2017, subject to the fulfilment of mandatory closing conditions and regulatory approvals.

Since its inception in 1933, Sequel has carved a niche for itself in the insurance and reinsurance businesses with an integrated suite of software that provides full end-to-end management of the related services. The company offers pioneering solutions that enable clients to gain a competitive advantage and better manage their business through greater efficiency, flexibility and data governance. Sequel employs talented insurance experts who serve a diverse customer base that includes some of the world's largest specialty insurance players.

The strategic acquisition will enable Verisk to strengthen its footprint in the U.K. and further expand its comprehensive offerings to the global complex commercial and specialty insurance industry. With unique software tools, Verisk is likely to gain a key insight of customer’s workflows, facilitating integrated global data analytics through a specialized end-to-end workflow solution. Consequently, the transaction is likely to be a great value addition for Verisk and is expected to be neutral to 2017 adjusted earnings per share while being accretive to 2018 adjusted earnings.

Verisk continuously seeks to expand its portfolio by leveraging its deep knowledge and embedded position to develop new, proprietary data sets and predictive analytics by working in unison with its customers to understand their evolving needs. Verisk recorded an average organic revenue growth of about 8% over the past 10 years. At the same time, it continues to extend its footprint in new markets, with healthy long-term growth potential, through targeted international expansion. This holistic growth model is likely to strengthen its leading position in the market.

However, Verisk has underperformed the industry with an average year-to-date decline of 0.1% as against a gain of 19% for the latter. The company remains susceptible to high volatility related to continued end-market headwinds affecting the energy business and in environmental health and safety solutions. Whether the acquisition could help the company to reverse this trend remains to be seen.

Verisk currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include S&P Global, Inc. (NYSE:SPGI) , Intertek Group (LON:ITRK) plc (OTC:IKTSY) and The Dun & Bradstreet Corporation (NYSE:DNB) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

S&P Global has a solid long-term earnings growth expectation of 12.5%. It topped estimates in each of the trailing four quarters with an average positive earnings surprise of 9.5%.

Intertek Group has a healthy long-term earnings growth expectation of 13%.

Dun & Bradstreet has a healthy long-term earnings growth expectation of 9%. It has beaten earnings estimate thrice in the trailing four quarters with a positive earnings surprise of 7.2%.

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