VERISIGN INC (VRSN) Stock Fundamental Analysis
NASDAQ:VRSN - Nasdaq - US92343E1029 - Common Stock - Currency: USD
Taking everything into account, VRSN scores 4 out of 10 in our fundamental rating. VRSN was compared to 82 industry peers in the IT Services industry. While VRSN belongs to the best of the industry regarding profitability, there are concerns on its financial health. VRSN is quite expensive at the moment. It does show a decent growth rate.
1. Profitability
1.1 Basic Checks
VRSN had positive earnings in the past year.
VRSN had a positive operating cash flow in the past year.
Each year in the past 5 years VRSN has been profitable.
In the past 5 years VRSN always reported a positive cash flow from operatings.
1.2 Ratios
Looking at the Return On Assets, with a value of 54.63%, VRSN belongs to the top of the industry, outperforming 100.00% of the companies in the same industry.
Looking at the Return On Invested Capital, with a value of 533.63%, VRSN belongs to the top of the industry, outperforming 100.00% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 54.63% | ||
| ROE | N/A | ||
| ROIC | 533.64% |
ROA(3y)47.16%
ROA(5y)45.43%
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)N/A
ROIC(5y)N/A
1.3 Margins
VRSN's Profit Margin of 50.20% is amongst the best of the industry. VRSN outperforms 100.00% of its industry peers.
In the last couple of years the Profit Margin of VRSN has remained more or less at the same level.
The Operating Margin of VRSN (67.95%) is better than 100.00% of its industry peers.
VRSN's Operating Margin has been stable in the last couple of years.
The Gross Margin of VRSN (87.83%) is better than 97.56% of its industry peers.
In the last couple of years the Gross Margin of VRSN has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 67.95% | ||
| PM (TTM) | 50.2% | ||
| GM | 87.83% |
OM growth 3Y1.34%
OM growth 5Y0.75%
PM growth 3Y-5.15%
PM growth 5Y0.3%
GM growth 3Y0.84%
GM growth 5Y0.55%
2. Health
2.1 Basic Checks
VRSN has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
Compared to 1 year ago, VRSN has less shares outstanding
The number of shares outstanding for VRSN has been reduced compared to 5 years ago.
The debt/assets ratio for VRSN is higher compared to a year ago.
2.2 Solvency
VRSN has an Altman-Z score of -4.27. This is a bad value and indicates that VRSN is not financially healthy and even has some risk of bankruptcy.
With a Altman-Z score value of -4.27, VRSN is not doing good in the industry: 89.02% of the companies in the same industry are doing better.
The Debt to FCF ratio of VRSN is 1.97, which is an excellent value as it means it would take VRSN, only 1.97 years of fcf income to pay off all of its debts.
VRSN has a better Debt to FCF ratio (1.97) than 69.51% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | N/A | ||
| Debt/FCF | 1.97 | ||
| Altman-Z | -4.27 |
ROIC/WACC59.49
WACC8.97%
2.3 Liquidity
A Current Ratio of 0.56 indicates that VRSN may have some problems paying its short term obligations.
Looking at the Current ratio, with a value of 0.56, VRSN is doing worse than 87.80% of the companies in the same industry.
VRSN has a Quick Ratio of 0.56. This is a bad value and indicates that VRSN is not financially healthy enough and could expect problems in meeting its short term obligations.
VRSN has a worse Quick ratio (0.56) than 87.80% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.56 | ||
| Quick Ratio | 0.56 |
3. Growth
3.1 Past
VRSN shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 9.65%, which is quite good.
Measured over the past years, VRSN shows a quite strong growth in Earnings Per Share. The EPS has been growing by 8.54% on average per year.
Looking at the last year, VRSN shows a small growth in Revenue. The Revenue has grown by 4.12% in the last year.
The Revenue has been growing slightly by 4.80% on average over the past years.
EPS 1Y (TTM)9.65%
EPS 3Y13.17%
EPS 5Y8.54%
EPS Q2Q%9.38%
Revenue 1Y (TTM)4.12%
Revenue growth 3Y5.47%
Revenue growth 5Y4.8%
Sales Q2Q%4.68%
3.2 Future
The Earnings Per Share is expected to grow by 11.59% on average over the next years. This is quite good.
VRSN is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 6.35% yearly.
EPS Next Y10.95%
EPS Next 2Y8.24%
EPS Next 3Y10.35%
EPS Next 5Y11.59%
Revenue Next Year4.28%
Revenue Next 2Y2.7%
Revenue Next 3Y4.69%
Revenue Next 5Y6.35%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 34.73, the valuation of VRSN can be described as expensive.
VRSN's Price/Earnings is on the same level as the industry average.
The average S&P500 Price/Earnings ratio is at 28.22. VRSN is valued slightly more expensive when compared to this.
The Price/Forward Earnings ratio is 30.31, which means the current valuation is very expensive for VRSN.
Compared to the rest of the industry, the Price/Forward Earnings ratio of VRSN is on the same level as its industry peers.
VRSN's Price/Forward Earnings ratio indicates a valuation a bit more expensive than the S&P500 average which is at 20.86.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 34.73 | ||
| Fwd PE | 30.31 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as VRSN.
VRSN's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 29.43 | ||
| EV/EBITDA | 25.07 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates VRSN does not grow enough to justify the current Price/Earnings ratio.
The decent profitability rating of VRSN may justify a higher PE ratio.
PEG (NY)3.17
PEG (5Y)4.07
EPS Next 2Y8.24%
EPS Next 3Y10.35%
5. Dividend
5.1 Amount
VRSN has a Yearly Dividend Yield of 1.10%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 2.43, VRSN pays a better dividend. On top of this VRSN pays more dividend than 80.49% of the companies listed in the same industry.
With a Dividend Yield of 1.10, VRSN pays less dividend than the S&P500 average, which is at 2.44.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.1% |
5.2 History
VRSN is new to the dividend game and has less than 3 years of track record.
Dividend Growth(5Y)N/A
Div Incr Years0
Div Non Decr Years0
5.3 Sustainability
DP0%
EPS Next 2Y8.24%
EPS Next 3Y10.35%
284.09
+4.39 (+1.57%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners82.02%
Inst Owner Change0.07%
Ins Owners0.7%
Ins Owner Change4.11%
Market Cap26.68B
Analysts80
Price Target248.58 (-12.5%)
Short Float %2.4%
Short Ratio2.05
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.1% |
Yearly DividendN/A
Dividend Growth(5Y)N/A
DP0%
Div Incr Years0
Div Non Decr Years0
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-2%
Min EPS beat(2)-2.11%
Max EPS beat(2)-1.89%
EPS beat(4)2
Avg EPS beat(4)-0.27%
Min EPS beat(4)-2.11%
Max EPS beat(4)1.94%
EPS beat(8)5
Avg EPS beat(8)0.06%
EPS beat(12)7
Avg EPS beat(12)0.27%
EPS beat(16)9
Avg EPS beat(16)0%
Revenue beat(2)0
Avg Revenue beat(2)-1.68%
Min Revenue beat(2)-1.85%
Max Revenue beat(2)-1.51%
Revenue beat(4)0
Avg Revenue beat(4)-1.71%
Min Revenue beat(4)-1.85%
Max Revenue beat(4)-1.51%
Revenue beat(8)0
Avg Revenue beat(8)-1.78%
Revenue beat(12)0
Avg Revenue beat(12)-1.69%
Revenue beat(16)0
Avg Revenue beat(16)-1.63%
PT rev (1m)2.81%
PT rev (3m)6.87%
EPS NQ rev (1m)1.29%
EPS NQ rev (3m)3.05%
EPS NY rev (1m)0%
EPS NY rev (3m)0.59%
Revenue NQ rev (1m)1.29%
Revenue NQ rev (3m)2.36%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.79%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 34.73 | ||
| Fwd PE | 30.31 | ||
| P/S | 16.93 | ||
| P/FCF | 29.43 | ||
| P/OCF | 28.48 | ||
| P/B | N/A | ||
| P/tB | N/A | ||
| EV/EBITDA | 25.07 |
EPS(TTM)8.18
EY2.88%
EPS(NY)9.37
Fwd EY3.3%
FCF(TTM)9.65
FCFY3.4%
OCF(TTM)9.97
OCFY3.51%
SpS16.78
BVpS-21.05
TBVpS-21.61
PEG (NY)3.17
PEG (5Y)4.07
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 54.63% | ||
| ROE | N/A | ||
| ROCE | 664.49% | ||
| ROIC | 533.64% | ||
| ROICexc | N/A | ||
| ROICexgc | N/A | ||
| OM | 67.95% | ||
| PM (TTM) | 50.2% | ||
| GM | 87.83% | ||
| FCFM | 57.54% |
ROA(3y)47.16%
ROA(5y)45.43%
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)N/A
ROIC(5y)N/A
ROICexc(3y)N/A
ROICexc(5y)N/A
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)-172.55%
ROCE(5y)-63.29%
ROICexcg growth 3YN/A
ROICexcg growth 5YN/A
ROICexc growth 3YN/A
ROICexc growth 5YN/A
OM growth 3Y1.34%
OM growth 5Y0.75%
PM growth 3Y-5.15%
PM growth 5Y0.3%
GM growth 3Y0.84%
GM growth 5Y0.55%
F-Score7
Asset Turnover1.09
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | N/A | ||
| Debt/FCF | 1.97 | ||
| Debt/EBITDA | 1.61 | ||
| Cap/Depr | 83.61% | ||
| Cap/Sales | 1.91% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 84.65% | ||
| Profit Quality | 114.62% | ||
| Current Ratio | 0.56 | ||
| Quick Ratio | 0.56 | ||
| Altman-Z | -4.27 |
F-Score7
WACC8.97%
ROIC/WACC59.49
Cap/Depr(3y)79.48%
Cap/Depr(5y)88.52%
Cap/Sales(3y)2.26%
Cap/Sales(5y)2.84%
Profit Quality(3y)109.8%
Profit Quality(5y)101.96%
High Growth Momentum
Growth
EPS 1Y (TTM)9.65%
EPS 3Y13.17%
EPS 5Y8.54%
EPS Q2Q%9.38%
EPS Next Y10.95%
EPS Next 2Y8.24%
EPS Next 3Y10.35%
EPS Next 5Y11.59%
Revenue 1Y (TTM)4.12%
Revenue growth 3Y5.47%
Revenue growth 5Y4.8%
Sales Q2Q%4.68%
Revenue Next Year4.28%
Revenue Next 2Y2.7%
Revenue Next 3Y4.69%
Revenue Next 5Y6.35%
EBIT growth 1Y5.14%
EBIT growth 3Y6.88%
EBIT growth 5Y5.59%
EBIT Next Year12.78%
EBIT Next 3Y7%
EBIT Next 5Y8.16%
FCF growth 1Y5.84%
FCF growth 3Y5.06%
FCF growth 5Y4.15%
OCF growth 1Y6.07%
OCF growth 3Y3.79%
OCF growth 5Y3.67%