Financial Review: Verisk Analytics (NASDAQ:VRSK) & CarGurus (NASDAQ:CARG)

Verisk Analytics (NASDAQ:VRSK) and CarGurus (NASDAQ:CARG) are both business services companies, but which is the superior stock? We will contrast the two businesses based on the strength of their risk, earnings, dividends, analyst recommendations, institutional ownership, valuation and profitability.

Profitability

This table compares Verisk Analytics and CarGurus’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Verisk Analytics	32.03%	252.11%	20.18%
CarGurus	4.04%	8.80%	5.90%

Institutional & Insider Ownership

90.0% of Verisk Analytics shares are owned by institutional investors. Comparatively, 86.9% of CarGurus shares are owned by institutional investors. 0.4% of Verisk Analytics shares are owned by company insiders. Comparatively, 17.2% of CarGurus shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and price targets for Verisk Analytics and CarGurus, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Verisk Analytics	0	7	6	1	2.57
CarGurus	0	3	7	0	2.70

Verisk Analytics currently has a consensus target price of $273.54, indicating a potential upside of 0.26%. CarGurus has a consensus target price of $29.25, indicating a potential upside of 0.93%. Given CarGurus’ stronger consensus rating and higher possible upside, analysts clearly believe CarGurus is more favorable than Verisk Analytics.

Volatility & Risk

Verisk Analytics has a beta of 0.84, meaning that its stock price is 16% less volatile than the S&P 500. Comparatively, CarGurus has a beta of 1.57, meaning that its stock price is 57% more volatile than the S&P 500.

Earnings and Valuation

This table compares Verisk Analytics and CarGurus’ top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Verisk Analytics	$2.78 billion	14.02	$614.60 million	$5.36	50.90
CarGurus	$877.03 million	3.44	$31.10 million	$0.28	103.50

Verisk Analytics has higher revenue and earnings than CarGurus. Verisk Analytics is trading at a lower price-to-earnings ratio than CarGurus, indicating that it is currently the more affordable of the two stocks.

Summary

Verisk Analytics beats CarGurus on 9 of the 15 factors compared between the two stocks.

About Verisk Analytics

Verisk Analytics, Inc. provides data analytics and technology solutions to the insurance markets in the United States and internationally. It offers policy language, prospective loss costs, policy writing and rating rules, and various underwriting solutions for risk selection and segmentation, pricing, and workflow optimization; property- and auto- specific rating and underwriting information solutions that allows clients to understand, quantify, underwrite, mitigate, and avoid potential loss for risks; catastrophe modeling solutions, which enables companies to identify, quantify, and plan for the financial consequences of catastrophes for use by insurers, reinsurers, intermediaries, financial institutions, and governments. The company also provides life insurance solutions for transforming current workflows in life insurance underwriting, claim insights, policy administration, unclaimed property/equity, compliance and fraud detection, and actuarial and portfolio modeling; Marketing Solutions, such as compliant, real-time decisioning, profitability, and risk assessment for inbound consumer interactions; and international underwriting and claims solutions. In addition, it offers claims insurance solutions, which provides analytics in fraud detection, compliance reporting, subrogation liability assessment, litigation, and repair cost estimation and valuation solutions; and casualty solutions, such as compliance, casualty claims decision support, and workflow automation solutions. Further, the company supplies software to the specialty insurance market. The company was founded in 1971 and is headquartered in Jersey City, New Jersey.

About CarGurus

CarGurus, Inc. operates an online automotive platform for buying and selling vehicles in the United States and internationally. It operates through two segments, U.S. Marketplace and Digital Wholesale. The company provides an online automotive marketplace where customers can search for new and used car listings from its dealers and sell their car to dealers and other consumers; and paid listings subscriptions for enhanced access to its marketplace that connects dealers to a large audience of informed and engaged consumers. It also offers dealer and non-dealer advertising products for its websites and social media platforms. The company operates online marketplaces under the CarGurus brand in the United States, Canada, and the United Kingdom; Autolist and CarOffer brands in the United States; and PistonHeads brand in the United Kingdom. The company was formerly known as CarGurus LLC and changed its name to CarGurus, Inc. in June 2015. CarGurus, Inc. was founded in 2005 and is headquartered in Cambridge, Massachusetts.