What Percentage of VeriSign’s Stock Price Can Be Attributed To Growth?

+19.32%
Upside
190
Market
227
Trefis
VRSN: Verisign CA logo
VRSN
Verisign CA

In this analysis, we quantify the percentage of VeriSign’s stock that can be attributed to growth.

We know, that a stock’s valuation can be highly influenced by future expectations of earnings growth. However, in theory, if a company sees no growth opportunities it should distribute all its earnings as dividends to its shareholders. Assuming that a company pays all earnings as dividends for the rest of the period, we can calculate Present Value of Growth Opportunity (PVGO) of a stock from the formula given below:

Screen Shot 2016-05-26 at 3.39.23 pm

Notes: For more details about the calculation for Present Value of Growth Opportunity please refer this link.

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment / ask questions on the comments section
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete coverage of VeriSign
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