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