Should You Buy the Dip in VeriSign?

NASDAQ: VRSN | VeriSign Inc. News, Ratings, and Charts

VRSN – Shares of leading domain registry services provider VeriSign (VRSN) have been losing momentum as part of the continuing technology-sector rout. Because market volatility has intensified amid the Fed’s aggressive rate increases and potential recessionary concerns, the question is will VRSN rebound soon? Read more to learn our view.

VeriSign, Inc. (VRSN) in Reston, Va., provides domain registry services and internet infrastructure services internationally. It operates two of the 13 global internet root servers and provides registration and authoritative resolution services to the .com and .net top-level domains.

Shares of VRSN have declined 31.9% in price year-to-date and 22.3% over the past month. The extended tech sell-off amid surging market volatility has caused VRSN to plummet so far this year.

The stock has declined 4.4% in price over the past five days.

Here is what could shape VRSN’s performance in the near term:

Stable Financials

In its fiscal first quarter, ended March 31, VRSN’s revenues increased 7.2% year-over-year to $347 million. Its deferred revenues rose 2.4% from its year-ago value to $1.18 billion as of March 31, 2022. Its net income came in at $158 million, up 5.3% from the same period last year. Its EPS rose 7.5% from the prior-year quarter to $1.43. Its operating cash flows improved 4.5% from the same period last year to $207 million. Also, VRSN, cash, cash equivalents, and marketable securities balance stood at $1.21 billion as of March 31, up marginally from year-end 2021.

However, the company’s operating margin has declined 20 basis points year-over-year to 64.8%.

Bullish Growth Prospects

VRSN’s revenues are expected to improve 5.8% year-over-year in its fiscal year 2022 second quarter, ending June 30. The $1.55 consensus EPS estimate for the current quarter indicates a 10.1% increase from the same period last year. In addition, the Street expects the company’s revenue and EPS to rise 7.9% and 9.8%, respectively, year-over-year to $360.53 million and $1.65 in its fiscal third quarter (ending September 30).

Analysts expect VRSN’s annual revenues to increase 7.9% in its fiscal 2022 and 10.9% next year. The annual consensus EPS estimates indicate a 7.3% improvement year-over-year in the current year and a 17.6% rise year-over-year next year.

Frothy Valuation

In terms of forward non-GAAP P/E, VRSN is currently trading at 27.34x, which is 48.3% higher than the 18.43x industry average. Also, its 0.86 trailing-12-month PEG multiple is 87.3% higher than the 0.46 industry average.

The stock’s Price/Sales and Price/Cash Flow ratios of 13.44 and 26, respectively, are significantly higher than the 2.95 and 16.88 industry averages. In addition, VRSN’s 22.51 forward EV/EBITDA ratio is 82.2% higher than the 12.36 industry average, while its 14.66 forward EV/Sales ratio is 397.4% higher than the 2.95 industry average.

POWR Ratings Indicate Uncertainty

VRSN has an overall C rating, which translates to Neutral in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

VRSN has a C grade, for Growth and Value. The company’s revenues have risen marginally over the past three years, justifying the Growth grade. In addition, VRSN’s premium valuation compared to its peers is in sync with the Value grade.

VRSN is ranked #6 of 33 stocks in the D-rated Internet – Services industry.

Beyond what I have stated above, view VRSN ratings for Sentiment, Stability, Momentum, and Quality here.

Bottom Line

VRSN is expected to benefit from the rapid tech integration across all industries, as evident in the bullish analyst sentiment. However, the stock looks overvalued at the current price levels. Thus, we think investors should wait until the equity markets stabilize and VRSN’s valuations improve before investing in the stock.

How Does VeriSign (VRSN) Stack Up Against its Peers?

While VRSN has a C rating in our proprietary rating system, one might want to consider looking at its industry peers, Perion Network Ltd. (PERI), Shutterstock, Inc. (SSTK), and Liquidity Services, Inc. (LQDT), which have a B (Buy) rating.


VRSN shares were trading at $173.82 per share on Friday afternoon, down $1.93 (-1.10%). Year-to-date, VRSN has declined -31.52%, versus a -12.89% rise in the benchmark S&P 500 index during the same period.


About the Author: Aditi Ganguly


Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
VRSNGet RatingGet RatingGet Rating
PERIGet RatingGet RatingGet Rating
LQDTGet RatingGet RatingGet Rating
SSTKGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


:  |  News, Ratings, and Charts

Should You Be Worried About $200 Oil?

One of the biggest challenges facing the economy is the rising price of oil. Already, it’s starting to eat into consumer spending and exacerbating other inflationary pressures. However, investors should prepare themselves for a world with much higher oil prices. In this article, we will explore some reasons that oil prices could surge even higher and strategies investors can use to profit in this scenario. Read on below to find out more…

:  |  News, Ratings, and Charts

3 Defensive Stocks to Consider Buying During the Market Downturn

The Fed’s aggressive interest rate increases to fight high inflation has raised concerns about a potential recession. During times of market turmoil, companies in defensive sectors will likely perform better than the broader market owing to inelastic demand for their products. Thus, we think it could be profitable now to bet on shares of defensive companies CVS Health (CVS), PepsiCo (PEP), and Albertsons (ACI). Read on.

:  |  News, Ratings, and Charts

5 Beaten-Down Tech Stocks That Are Screaming Buys

Concerns over the hawkish Fed and increasing odds of the economy slipping into recession have caused a broad-based sell-off in the stock markets over the past few weeks. However, this offers entry opportunities in beaten-down tech stocks VMware (VMW), Jabil (JBL), Fujitsu (FJTSY), Semtech (SMTC), and Cirrus Logic (CRUS), which possess solid fundamentals.

:  |  News, Ratings, and Charts

3 High-Quality Dividend Aristocrats to Buy in May

The stock market is experiencing heightened volatility and given the Fed’s aggressive monetary stance to tame inflation, stocks might tumble further in price before hitting a bottom. Hence, we think dividend aristocrats W.W. Grainger (GWW), Target Corp. (TGT), and Cintas Corp. (CTAS) could be quality additions to one’s portfolio now. Read on.

:  |  News, Ratings, and Charts

5 Beaten-Down Tech Stocks That Are Screaming Buys

Concerns over the hawkish Fed and increasing odds of the economy slipping into recession have caused a broad-based sell-off in the stock markets over the past few weeks. However, this offers entry opportunities in beaten-down tech stocks VMware (VMW), Jabil (JBL), Fujitsu (FJTSY), Semtech (SMTC), and Cirrus Logic (CRUS), which possess solid fundamentals.

Read More Stories

More VeriSign Inc. (VRSN) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All VRSN News