Verisk Analytics, Inc.VRSKNASDAQ

Overview Intelligence Charts News Fundamentals Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Hold

Fair Value: $203.48 per share(market-calibrated)

-5.3%

Upside to Fair Value

Current

$214.79

Pure Model

$201.90

Fair Value

$203.48

Bull Case

$246.72

Bear Case

$164.14

Market Reality Check

Model Terminal Growth

2.25%

Market-Implied Growth

2.97%

Calibrated Growth

2.36%

Fair value uses 85% model / 15% market-implied terminal growth. Pure model: $201.90.

What's Driving This Ratingfor VRSK

↓

CapEx normalizing toward maintenance

Historical CapEx is 8.08% of revenue (heavy investment phase). Model fades this to 3.50% by Year 10, freeing up ~$199M in annual FCF. This is the biggest driver of long-term cash flow improvement.

✓

Premium margins already priced in

EBIT margin of 45.54% is already well above sector average. The model holds this level — there's limited room for margin expansion to drive upside. Valuation depends primarily on revenue growth.

→

Moderate revenue growth

Analyst consensus projects 4.55% revenue growth, fading to 2.25% by Year 10. Revenue reaches $4.4B (vs $3.1B today).

✓

Model and market roughly agree

Market-implied terminal growth of 2.97% is close to the model's 2.25% (only 72bps apart). The DCF assumptions are well-aligned with how the market is pricing this stock.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 75.19% indicates efficient cash generation. FCF reaches $1.8B by Year 10 (42.25% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.80

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)8.09%

Cost of Debt

Pre-tax Cost of Debt2.69%

Tax Rate22.45%

After-tax Cost of Debt2.08%

Equity Weight (E/V)85.57%

Debt Weight (D/V)14.43%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (85.57% × 8.09%) + (14.43% × 2.08%)

= 7.22%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$3.2B	$3.7B	$3.9B	$4.1B	$4.4B
EBIT	$1.5B	$1.7B	$1.8B	$1.9B	$2.0B
Tax	$328M	$374M	$399M	$417M	$446M
NOPAT	$1.1B	$1.3B	$1.4B	$1.4B	$1.5B
+ Depreciation	$342M	$389M	$416M	$434M	$464M
- Capex	$260M	$258M	$236M	$205M	$153M
- Δ NWC	$14M	$22M	$9M	$9M	$10M
Free Cash Flow	$1.2B	$1.4B	$1.5B	$1.7B	$1.8B
Discount Factor	0.933	0.811	0.706	0.614	0.498
Present Value	$1.1B	$1.1B	$1.1B	$1.0B	$917M

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$1.8B

Terminal Growth Rate2.25%

WACC7.22%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$37.9B

PV of Terminal Value$18.9B

Exit Multiple Method

Year 10 EBITDA$2.4B

Exit Multiple (EV/EBITDA)18.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$44.1B

PV of Terminal Value$22.0B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$10.5B

PV of Terminal Value$18.9B

Enterprise Value$29.4B

(-) Net Debt$2.9B

Equity Value$26.5B

Shares Outstanding139M

Price per Share$190.80

Exit Multiple Method

PV of Projected FCFs$10.5B

PV of Terminal Value$22.0B

Enterprise Value$32.5B

(-) Net Debt$2.9B

Equity Value$29.6B

Shares Outstanding139M

Price per Share$213.01

Pure Model Fair Value

$201.90

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.25%	1.75%	2.25%	2.75%	3.25%
5.22%	$260.00	$275.19	$295.51	$324.05	$362.98
6.22%	$219.47	$228.13	$238.96	$252.92	$271.58
7.22%	$189.99	$195.40	$201.90	$209.86	$219.82
8.22%	$167.11	$170.72	$174.93	$179.91	$185.89
9.22%	$148.60	$151.12	$153.99	$157.31	$161.18

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$164.14

-23.6% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 1.00

Base Case

$201.90

-6.0% vs current

• Analyst consensus
• Terminal growth: 2.3%
• Beta: 0.80

Bull Case

$246.72

14.9% vs current

• +25% vs analyst consensus
• Terminal growth: 2.8%
• Beta: 0.68

Key Assumptions & Drivers• Industrials Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth4.55%

Year 3 Revenue Growth6.50%

Year 5 Revenue Growth2.25%

Year 7 Revenue Growth2.25%

Year 10 Revenue Growth2.25%

Terminal Growth Rate2.25%

Margin & Efficiency

Current EBIT Margin45.54%

Tax Rate22.45%

Historical Capex / Rev8.08%

Terminal Capex / Rev3.50%

NWC / Revenue10.00%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 18x EV/EBITDA (Industrials sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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