Why Verisk (VRSK) Lags Behind Peers in the Data & Business Process Services Sector Despite Strong Margins

The Data & Business Process Services sector has seen robust growth in 2025, with companies like Automatic Data Processing (ADP) and Moody's Corporation outpacing Verisk Analytics (VRSK) in revenue expansion and profitability. Despite Verisk's strong net income margins and a diversified portfolio in insurance and risk analytics, its stock has underperformed relative to peers, raising questions about valuation misalignment and operational execution. This analysis unpacks the earnings and valuation dynamics driving this divergence.

Earnings Performance: Growth Stalls Amid Peer Momentum

Verisk's third-quarter 2025 results highlight a troubling trend: while revenue rose 5.9% year-over-year to $768 million, net income grew a meager 2.5% to $226 million. This contrasts sharply with ADP, whose net income surged 15.7% in 2023, 9.96% in 2024, and 8.73% in 2025, reaching a $4.08 billion net income. Moody's, another key peer, reported a 75% year-over-year jump in private credit revenue and a 29.2% net profit margin, with analysts forecasting further margin expansion.

Verisk's sluggish growth is compounded by a revised 2025 revenue forecast of $3.05–$3.08 billion, below the $3.12 billion analysts' average. This downward revision signals investor skepticism about the company's ability to scale its offerings in a competitive landscape. Meanwhile, Nielsen (now NIQ) demonstrated resilience, with 5.6% year-over-year revenue growth in Q2 2025 and a 20.6% adjusted EBITDA margin, underscoring the sector's capacity for innovation-driven profitability.

Valuation Misalignment: Overpriced Relative to Fundamentals

Verisk's current price-to-earnings (P/E) ratio of 33.97 appears attractive at first glance but masks deeper issues. This valuation is 20% above its fair P/E of 27.6x and significantly higher than the US Professional Services industry average of 24.3x. By comparison, ADP trades at a more compelling 24.98x P/E according to full ratio, while Moody's, despite a 38.71x P/E as reported by Wisesheets, benefits from stronger growth expectations.

The disconnect is further evident in historical context. Verisk's P/E has averaged 39.58 over the past decade, but its 2025 valuation of 33.97 suggests a discount to its intrinsic value. This misalignment may reflect investor concerns about the company's ability to sustain margins amid rising competition. For instance, IHS Markit, despite a 4.82x P/E in 2025, has struggled with profitability, highlighting the sector's volatility. Verisk's premium valuation thus appears unjustified relative to its peers' growth trajectories.

Market Sentiment and Strategic Challenges

Verisk's underperformance is also tied to its strategic positioning. While the company excels in insurance-specific data analytics, peers like ADP and Nielsen have diversified into broader markets, including financial services and consumer insights. This breadth allows them to capitalize on cross-industry trends, such as AI-driven analytics and regulatory compliance tools. Verisk's narrower focus may limit its scalability in a sector increasingly driven by horizontal solutions.

Moreover, Verisk's stock has faced headwinds from mixed quarterly results. A net income dip in Q3 2025-from $253 million in Q2 to $226 million-has fueled doubts about its operational consistency. In contrast, Moody's and ADP have maintained steady earnings growth, reinforcing their reputations as reliable performers.

Conclusion: A Case for Rebalancing Exposure

Verisk's strong margins and niche expertise in risk analytics remain valuable, but its earnings growth and valuation metrics fail to justify its current premium. Investors seeking exposure to the Data & Business Process Services sector may find better value in peers like ADP or Moody's, which combine robust growth with more attractive valuations. For Verisk, the path forward requires not only operational consistency but also a strategic pivot to broader markets to close the gap with its competitors.