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

+2.87%
Upside
197
Market
203
Trefis
VRSN: Verisign CA logo
VRSN
Verisign CA

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. Forecast Of The Day: Verisign’s Number Of Domain Registrations
  2. Verisign Stock Has Outperformed The Broader Markets Since 2017- Here’s Why
  3. Here’s Why Verisign Stock Has Underperformed The S&P Since 2020
  4. After Consistently Underperforming The S&P, Verisign Stock Looks Set To Bounce Back
  5. Can Verisign Stock Continue Beating The Market?
  6. You Should Read This Before Buying NetApp Stock

(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