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VeriSign Inc VRSN

Morningstar Rating
$193.02 −3.54 (1.80%)
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Company Report

Verisign Earnings: China Headwinds Drag on Domain Growth but Pricing Upside Boosts Sky-High Margins

Wide-moat Verisign reported mixed fourth-quarter and full-year fiscal 2023 results, which came in marginally below our top-line forecasts but surpassed our profitability expectations. The .com and .net domain name base continues to be hindered by weak registration demand in China stemming from economic headwinds, a weaker local currency, and increasingly stringent and burdensome local internet regulation. Following the result, we lower our fair value estimate to $200 per share from $210 as we now factor in a slightly more gradual price realization resulting in lower top-line growth. Nonetheless, Verisign shares continue to screen as fairly valued relative to our updated valuation.

Price vs Fair Value

VRSN is trading at a 3% discount.
Price
$193.02
Fair Value
$815.00
Uncertainty
Low
1-Star Price
$411.00
5-Star Price
$694.00
Economic Moat
Lml
Capital Allocation
Myytrywcgk

Bulls Say, Bears Say

Bulls

We expect Verisign to maximize price increases for the .com domain within the contractual limits, supporting further margin expansion.

Bears

While highly unlikely, the potential loss of the .com and .net contracts would lead to material value destruction for shareholders, given these contracts underpin practically all Verisign’s income.

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News

Trading Information

Previous Close Price
$196.56
Day Range
$192.62196.00
52-Week Range
$188.44229.72
Bid/Ask
$171.56 / $217.00
Market Cap
$19.48 Bil
Volume/Avg
12 / 615,508

Key Statistics

Price/Earnings (Normalized)
27.82
Price/Sales
13.54
Dividend Yield (Trailing)
Dividend Yield (Forward)
Total Yield
4.63%

Company Profile

Verisign is the sole authorized registry for several generic top-level domains, including the widely utilized .com and .net top-level domains. The company operates critical internet infrastructure to support the domain name system, including operating two of the world’s 13 root servers that are used to route internet traffic. In 2018, the firm sold off its Security Services business, signalling a renewed focus on the core registry business.
Sector
Technology
Industry
Software - Infrastructure
Stock Style Box
Mid Core
Total Number of Employees
908

Competitors

Valuation

Metric
VRSN
GDDY
GOOGL
Price/Earnings (Normalized)
27.8241.5124.78
Price/Book Value
197.126.42
Price/Sales
13.543.976.04
Price/Cash Flow
22.5418.4317.58
Price/Earnings
VRSN
GDDY
GOOGL

Financial Strength

Metric
VRSN
GDDY
GOOGL
Quick Ratio
0.790.151.94
Current Ratio
0.830.452.10
Interest Coverage
13.362.98266.75
Quick Ratio
VRSN
GDDY
GOOGL

Profitability

Metric
VRSN
GDDY
GOOGL
Return on Assets (Normalized)
50.38%9.53%24.48%
Return on Equity (Normalized)
35.00%
Return on Invested Capital (Normalized)
455.34%23.05%30.54%
Return on Assets
VRSN
GDDY
GOOGL
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