Here’s Why Verisign Stock Has Underperformed The S&P Since 2020

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VRSN: Verisign CA logo
VRSN
Verisign CA

Verisign Inc. (NASDAQ: VRSN) stock price has lost 19% from around $216 at 2020 end to $174 currently, primarily due to unfavorable changes in its P/S multiple. During this period, the company witnessed a 13% rise in revenues, and a 4% drop in the outstanding share count positively impacting the company’s revenue per share. Despite this, the company’s stock price has dropped, and it has underperformed the S&P 500, which returned around 10% over the same period.

In our interactive dashboard, Why Verisign Stock Moved: VRSN Stock Has Lost 19% Since 2020, we break down the factors behind this move.

(A) VRSN’s Total Revenue has risen 13% from $1.3 billion in FY 2020 to $1.4 billion currently

  • Verisign’s total revenue has risen steadily from $1.3 billion in FY ’21 to $1.4 billion on an LTM basis.
  • Verisign operates a diverse array of network infrastructure and is a leading domain name provider. The company also offers a wide range of security services.
  • The company operates in only one reportable segment and sales have been rising steadily every year over the past decade.
  • For additional details about VRSN’s revenues and comparison to peers, see Verisign (VRSN) Revenue Comparison
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(B) Revenue per share (RPS) increased 19% from $10.99 in FY 2020 to $13.03 currently

  • VRSN’s revenue rose from $1.3 billion in FY 2020 to $1.4 billion currently, and the outstanding share count dropped from 115.1 million in FY 2020 to around 110.1 million currently.
  • Due to this, RPS has risen 19% from $10.99 in FY ’20 to $13.03 currently.

(C) Price-To-Sales (P/S) multiple for VRSN rose initially from 18.7x in 2020 to 20.9x by 2021 end, but has pulled back to 13.4x currently, much lower than its 2020 level

  • VRSN’s P/S multiple rose strongly to around 20.9x by late 2021, on the back of rising investor expectations surrounding increased demand for its products, leading to a rise in the company’s sales.
  • However, due to the increased economic uncertainty weighing on the broader markets, the P/S multiple has pulled back, currently standing at around 13.4x.
  • For additional details about the company stock returns and comparison to peers, see Verisign (VRSN) Stock Return Comparison.

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Returns Jun 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 VRSN Return 3% -29% 137%
 S&P 500 Return 1% -12% 87%
 Trefis Multi-Strategy Portfolio 3% -16% 230%

[1] Month-to-date and year-to-date as of 6/2/2022
[2] Cumulative total returns since the end of 2016

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