Is VRSK a good stock to buy?We came across a bullish thesis on Verisk Analytics, Inc. on THE ALPHA TRADER's Substack by Warren. In this article, we will summarize the bulls' thesis on VRSK. Verisk Analytics, Inc.'s share was trading at $190.87 as of October 20th 2026. VRSK's trailing and forward P/E were 26.39 and 20.08 respectively according to Yahoo Finance.
This isn't the first time we see a data analytics company pitched as a great investment. Unfortunately, VRSK shares lost 19.62% of their value over the last 12 months. Comparable stocks like FICO and Moody's lost 49.19% and 6.95%, respectively, during the same period. Businesses depend on data to assess risk and make decisions, but that hasn't protected these stocks from falling share prices. Does VRSK's recent recovery make this a good time to buy, or is there more reason for caution?
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In June, we published an article about the 10 Most Profitable Industrial Stocks to Buy Now and VRSK ranked #4 in that article. VRSK gained 5.76% over the four months since then. So, hedge funds were right about VRSK. This article explains why hedge funds were bullish on VRSK. Before getting into our analysis, let's take a look at the business and why some investors like the stock so much.
Verisk Analytics, Inc. (NASDAQ:VRSK) provides data and analytics services mainly to property and casualty (P&C) insurers. Its investment case revolves around whether Verisk Analytics can continue compounding as a high-quality data platform while the market still views it as a mature insurance analytics provider. After selling its energy and financial services businesses, Verisk Analytics now earns nearly all its revenue from P&C insurance.
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About 90% of the largest P&C insurers use its products, and customer retention stays above 95%, meaning insurers rarely move away once they're on the platform. That gives the company steady, predictable revenue. The stock trades more than 40% below its 52-week high of $322.92. Bulls see this pullback as an opportunity, arguing the market is undervaluing a critical risk-intelligence business that trades at roughly 16-19 times EV/EBITDA.
The bullish case rests on Verisk Analytics's competitive moat, built on the idea that insurers will lean more heavily on advanced analytics as risks grow more complex. Years of industry-wide data give the company an edge in building accurate risk models, and switching away from its tools could hurt an insurer's underwriting accuracy and regulatory compliance — which keeps customers locked in. As climate-related risks rise, bulls believe Verisk Analytics can expand beyond traditional insurance analytics into broader climate-risk and enterprise risk intelligence.
Verisk Analytics's AI strategy is another piece of the long-term story, though it's still unclear how much growth it will add. In fiscal 2025, the company completed more than 100 AI and cloud upgrades and integrated Anthropic's Claude AI into its platform through the Model Context Protocol. These moves could deepen customer reliance and make its data more valuable, but Verisk Analytics still needs to prove that AI can drive faster revenue growth rather than just improve existing products.
Financially, Verisk Analytics remains solid even as growth has cooled. Fiscal 2025 organic revenue grew 6.6%, margins expanded, and free cash flow reached $1.19 billion, with retention holding above 95%. Growth slowed further in the first quarter of 2026 to 4.7%, mainly due to lighter weather-related activity and tougher comparisons, but management kept its full-year 2026 revenue guidance at $3.19 billion to $3.24 billion. The recent $3.1 billion sale of its energy analytics unit further sharpens the company's focus on insurance analytics.
Verisk Analytics's revenue is increasingly tied to insurance analytics, where steady demand from insurers underpins the investment case. Its position in P&C insurance gives it exposure to underwriting, catastrophe modeling, regulatory reporting, and climate-risk analytics. Results can swing in the short term with weather activity and insurance cycles, but the bigger question is whether Verisk Analytics can keep expanding its analytics ecosystem and turn its data advantage into lasting growth.
The stock's decline reflects concerns about growth, not the quality of the business. Verisk Analytics still generates strong margins and free cash flow, but the market has questioned whether mid-single-digit revenue growth justifies a higher valuation multiple. The stock remains well below its previous highs, and investors will be watching whether AI adoption, climate-risk demand, and regulatory needs can drive stronger growth while retention stays above 95%.
Another risk for the stock is the reliability of its catastrophe models as climate patterns change. Historical insurance data may become less useful when extreme weather behaves differently from past experience. Verisk warns that climate change can make modeled outcomes less certain and inaccurate information could hurt customer retention. Its competitive advantage depends on insurers trusting these tools when pricing policies and managing exposure. Repeated shortcomings could encourage customers to use alternative models or demand stronger validation. Keeping models accurate could also require additional research spending, weighing on profitability. In our opinion, this could limit Verisk's price multiples if growing climate complexity weakens confidence in its analytics rather than simply increasing demand
Verisk Analytics sits at the intersection of insurance, climate risk, and AI-powered analytics — a potentially large opportunity, though one that may take time to play out. If insurers adopt more advanced risk models and AI tools, Verisk Analytics could benefit from a bigger addressable market. But investors still need proof that these trends can accelerate growth, not just reinforce the company's existing position.
Hedge fund positioning shows a strong signal for Verisk Analytics (see why Madison Investments is bullish on VRSK ). As per our database, 63 hedge funds held Verisk Analytics at the end of the second quarter, up from 50 in the previous quarter. That jump suggests institutional investors grew more confident in the company's recurring revenue and long-term prospects despite concerns about moderate growth. By comparison, Fair Isaac Corporation (NYSE:FICO) was held by 50 hedge funds, down from 60, S&P Global Inc. (NYSE:SPGI) was held by 124 hedge funds, up from 122, and Moody's Corporation (NYSE:MCO) was held by 100 hedge funds, up from 95. Verisk Analytics posted the largest jump in ownership among the group, S&P Global Inc. held onto the broadest institutional base, Moody's Corporation saw a modest improvement, and Fair Isaac Corporation was the only one where hedge funds pulled back.
Short interest data also paints a fairly calm picture for Verisk Analytics, Inc., with 3.71% of its float sold short — below Fair Isaac Corporation's 12.53% but above S&P Global Inc.'s 2.19% and Moody's Corporation's 1.89%. This suggests bearish bets against Verisk Analytics, Inc. remain limited compared with Fair Isaac Corporation, though somewhat higher than those against its other financial-data peers.
Valuation Analysis
VRSK's EV/EBITDA is 15.73x. Moody's Corporation, S&P Global Inc., and Fair Isaac Corporation trade at EV/EBITDA multiples of 20.22x, 21.95x, and 19.21x, respectively. VRSK's own EV/EBITDA was 20.15x on December 31, 2025, meaning its current valuation is approximately 22% lower. We believe the current valuation reflects significant investor concerns about slowing organic growth and whether AI can meaningfully expand demand for Verisk's products. However, its discount of approximately 18%–28% to peers appears meaningful given its recurring revenue and strong cash generation, although differences in growth prospects warrant some discount. Verisk Analytics, Inc.'s organic constant-currency adjusted EBITDA grew 8.5% in fiscal 2025 and 5.9% in the first quarter of 2026, showing continued profit growth despite slowing revenue growth. We believe 15.73 times trailing EBITDA could support reasonable returns if operating profits keep growing and translate into cash available for debt repayment, dividends, and buybacks, without requiring AI to accelerate growth sharply. If Verisk protects its customer relationships and sustains cash generation, the current valuation could offer an attractive entry point despite its more modest growth outlook.
Previously, we covered a bullish thesis on S&P Global (SPGI) by Felix in April 2025, which highlighted the company's undervaluation, free cash flow growth potential, and attractive valuation. SPGI's stock price has depreciated by approximately 6.92% since our coverage. We believe VRSK could be a good long-term investment, as its discounted valuation offers an attractive entry point if steady profit growth and strong cash generation continue.
Verisk Analytics, Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds . While VRSK could offer long-term upside through steady insurance analytics demand and strong cash generation, we believe some AI stocks offer stronger long-term potential, with a high probability of delivering superior returns on a much shorter timeline. If you are looking for an AI stock that is more promising than VRSK and that has 10,000% upside potential, check out our report about this cheapest AI stock .
Disclosure: None.
