Verisk Analytics, Inc.VRSKNASDAQ

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

DCF Valuation

DCF Valuation Summary

Hold

Fair Value: $194.78 per share(market-calibrated)

+9.9%

Upside to Fair Value

Current

$177.30

Pure Model

$195.00

Fair Value

$194.78

Bull Case

$242.69

Bear Case

$154.77

Market Reality Check

Model Terminal Growth

2.25%

Market-Implied Growth

2.13%

Calibrated Growth

2.23%

Fair value uses 85% model / 15% market-implied terminal growth. Pure model: $195.00.

What's Driving This Ratingfor VRSK

↓

CapEx normalizing toward maintenance

Historical CapEx is 8.63% of revenue (heavy investment phase). Model fades this to 3.50% by Year 10, freeing up ~$231M in annual FCF. This is the biggest driver of long-term cash flow improvement.

✓

Premium margins already priced in

EBIT margin of 44.99% 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.

⚠

Analyst growth decelerates sharply

Revenue growth drops from 13.19% in Year 1 to 2.25% by Year 5 (per analyst consensus). This growth deceleration is a key reason the model may undervalue the stock if growth re-accelerates.

✓

Model and market roughly agree

Market-implied terminal growth of 2.13% is close to the model's 2.25% (only 12bps 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 75.44% indicates efficient cash generation. FCF reaches $1.9B by Year 10 (42.68% 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)8.12%

Cost of Debt

Pre-tax Cost of Debt3.97%

Tax Rate22.62%

After-tax Cost of Debt3.07%

Equity Weight (E/V)88.59%

Debt Weight (D/V)11.41%

WACC Calculation

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

WACC = (88.59% × 8.12%) + (11.41% × 3.07%)

= 7.54%

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	$3.3B	$3.8B	$4.0B	$4.2B	$4.5B
EBIT	$1.5B	$1.7B	$1.8B	$1.9B	$2.0B
Tax	$332M	$382M	$409M	$428M	$457M
NOPAT	$1.1B	$1.3B	$1.4B	$1.5B	$1.6B
+ Depreciation	$378M	$434M	$466M	$487M	$521M
- Capex	$282M	$281M	$255M	$219M	$157M
- Δ NWC	$38M	$26M	$9M	$9M	$10M
Free Cash Flow	$1.2B	$1.4B	$1.6B	$1.7B	$1.9B
Discount Factor	0.930	0.804	0.695	0.601	0.483
Present Value	$1.1B	$1.2B	$1.1B	$1.0B	$927M

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

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$1.9B

Terminal Growth Rate2.25%

WACC7.54%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$37.1B

PV of Terminal Value$17.9B

Exit Multiple Method

Year 10 EBITDA$2.5B

Exit Multiple (EV/EBITDA)18.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$45.8B

PV of Terminal Value$22.1B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$10.7B

PV of Terminal Value$17.9B

Enterprise Value$28.6B

(-) Net Debt$3.0B

Equity Value$25.6B

Shares Outstanding$142M

Price per Share$180.20

Exit Multiple Method

PV of Projected FCFs$10.7B

PV of Terminal Value$22.1B

Enterprise Value$32.8B

(-) Net Debt$3.0B

Equity Value$29.8B

Shares Outstanding$142M

Price per Share$209.81

Pure Model Fair Value

$195.00

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%
5.54%	$239.81	$265.32	$298.58	$343.75	$408.63
6.54%	$191.18	$206.23	$224.77	$248.21	$278.76
7.54%	$159.13	$168.76	$180.20	$194.03	$211.08
8.54%	$136.74	$143.25	$150.80	$159.65	$170.18
9.54%	$120.42	$125.02	$130.24	$136.24	$143.20

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

$154.77

-12.7% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 1.01

Base Case

$195.00

10.0% vs current

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

Bull Case

$242.69

36.9% 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 Growth13.19%

Year 3 Revenue Growth7.51%

Year 5 Revenue Growth2.25%

Year 7 Revenue Growth2.25%

Year 10 Revenue Growth2.25%

Terminal Growth Rate2.25%

Margin & Efficiency

Current EBIT Margin44.99%

Tax Rate22.62%

Historical Capex / Rev8.63%

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 (S&P 500: 22x P/E)

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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