Verisign Stock Has Underperformed Despite Steady Sales Growth – Here’s Why

+21.80%
Upside
171
Market
208
Trefis
VRSN: Verisign logo
VRSN
Verisign

Verisign Inc. (NASDAQ: VRSN) stock price has gained 31% from around $148 at 2018 end to $193 currently, primarily due to favorable changes in its revenues and P/S multiple. During this period, the company also witnessed a 6.3% drop in its outstanding share count, positively impacted the company’s revenue per share. Due to this, the company’s stock price has risen, but it has failed to outperform the S&P 500, which returned around 60% over the same period.

In our interactive dashboard, Why Verisign Stock Moved: VRSN Stock Has Gained 31% Since 2018, we break down the factors behind this move.

(A) VRSN’s Total Revenue has risen 13% from $1.2 billion in FY 2018 to $1.4 billion currently

  • Verisign’s total revenue has risen steadily from $1.2 billion in FY ’18 to $1.3 billion in FY ’21, and currently stands even higher at around $1.4 billion.
  • 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 and consistently every year over the past decade.
  • For additional details about VRSN’s revenues and comparison to peers, see Verisign (VRSN) Revenue Comparison
Relevant Articles
  1. Down 15% This Year Is Verisign Stock A Better Pick Over F5 Networks?
  2. Despite 40% Rise This Year Is Akamai Stock A Better Pick Than VeriSign?
  3. Is FirstEnergy A Better Pick Than Verisign Stock?
  4. How Has VeriSign Stock Performed During The 2022-23 Inflation Shock?
  5. What’s Next For VeriSign Stock After A 20% Fall Since 2021?
  6. Forecast Of The Day: Verisign’s Number Of Domain Registrations

(B) Revenue per share (RPS) increased 21% from $10.47 in FY 2018 to $12.64 currently

  • VRSN’s revenue rose from $1.2 billion in FY 2018 to $1.4 billion currently, and the outstanding share count dropped from 116 million in FY 2018 to around 108.6 million currently.
  • Due to this, RPS has risen around 21% from $10.47 in FY ’18 to $12.64 currently.

(C) Price-To-Sales (P/S) multiple for VRSN rose initially from 14.2x in 2018 to 21.1x by 2021 end, but has pulled back to 15.3x currently, still higher than its 2018 level

  • VRSN’s P/S multiple rose strongly to around 21.1x 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 15.3x.
  • For additional details about the company stock returns and comparison to peers, see Verisign (VRSN) Stock Return Comparison.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

 Returns Nov 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 VRSN Return -3% -23% 156%
 S&P 500 Return 3% -16% 78%
 Trefis Multi-Strategy Portfolio 8% -16% 232%

[1] Month-to-date and year-to-date as of 11/15/2022
[2] Cumulative total returns since the end of 2016

 

Invest with Trefis Market Beating Portfolios
See all Trefis Price Estimates