Index reshuffle puts Verisk Analytics stock in focus

Verisk Analytics (VRSK) has been dropped from several Russell growth benchmarks and the NASDAQ-100, while being added to the Russell 1000 Dynamic Index, a shift that coincides with elevated options market volatility.

At a share price of US$183.72, Verisk Analytics has seen a 1 day share price return of 2.33% and a 7 day share price return of 2.03%. Its year to date share price return is down 16.88% and its 1 year total shareholder return is down 38.45%, suggesting recent index exits and options market activity are influencing sentiment more than changes in the underlying business.

If the index reshuffle has you rethinking where to find potential opportunities, it could be a good moment to broaden your search with 20 top founder-led companies

With Verisk Analytics posting a long stretch of weaker share price returns alongside steady revenue and net income growth, is the current valuation discount hinting at mispricing, or is the market already factoring in the future growth?

Most Popular Narrative: 163.6% Overvalued

Based on the leading narrative, Verisk Analytics has a fair value estimate of $69.70, far below the last close of $183.72, which frames a very different pricing picture from recent index moves.

Verisk Analytics is a regulatory-grade data toll on the US property & casualty insurance industry, monetized through approximately 83% subscription revenue with approximately 92% client retention. VRSK's narrow-moat franchise produces FCF with an unusually high degree of predictability, durable enough to justify a 15× exit multiple at a 35% margin of safety. The 2022 to 2025 portfolio simplification (Energy, Argus, 3E, Marketing Solutions all divested) has produced a cleaner pure-play with structurally higher margins (Adj EBITDA 56.2% in 2025 vs. 53.5% in 2023) and a shrinking share count (approximately 19% reduction since 2019). What the investor is paying for here is a regulatory annuity with an embedded MSD price-and-volume escalator, and walking away from any thesis premised on this becoming a HSD-to-DD revenue compounder.

The fair value call rests on a tight set of cash flow assumptions, margin ceilings, and a specific exit multiple, all pulled together into one strict valuation spine. Curious which revenue pace, profitability band, and terminal valuation hurdle have to line up for Verisk Analytics to clear that bar.

Result: Fair Value of $69.70 (OVERVALUED)

However, Verisk Analytics could still surprise you if subscription retention weakens or if regulators change how insurers can rely on its data and pricing frameworks.

Another view on Verisk Analytics valuation

While the leading narrative pegs Verisk Analytics at a fair value of $69.70 and labels the stock as overvalued, our DCF model points the other way, with a future cash flow value estimate of $260 per share, implying the stock is trading at a discount instead.

Two such different outcomes from credible methods highlight how sensitive Verisk Analytics is to small shifts in growth, margins, or discount rates. This raises a practical question for you: which set of assumptions do you trust more for the next few years?

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Verisk Analytics for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 41 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

Given the mixed signals around Verisk Analytics, it makes sense to check the underlying data and sentiment quickly so you can shape your own view, starting with the balance of 3 key rewards and 1 important warning sign

Looking for more investment ideas beyond Verisk Analytics?

If Verisk Analytics has you rethinking your watchlist, do not stop here. Broaden your options and pressure test your thesis with a few targeted stock screens.

• Spot potential value plays early by scanning for underpriced quality companies using the 41 high quality undervalued stocks.
• Strengthen your focus on resilience by filtering for companies with dependable finances through the solid balance sheet and fundamentals stocks screener (47 results).
• Hunt for under-the-radar opportunities with sound fundamentals by checking the screener containing 19 high quality undiscovered gems.

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.