VeriSign stock is estimated at
VeriSign’s stock (NAS: VRSN, 30 years Financials) is estimated at fair value, as calculated by GuruFocus Value. The GuruFocus Value is GuruFocus’s estimate of the fair value at which the stock is to trade. It is calculated based on the historical multiples at which the stock has traded, past business growth, and analysts’ estimates of future business performance. If a stock’s price is significantly above the GF value line, it is overvalued and its future performance may be poor. On the other hand, if it is significantly below the GF value line, its future return is likely to be higher. At its current price of $ 219.26 per share and market cap of $ 24.7 billion, VeriSign stock is estimated to be fair value. The GF value for VeriSign is shown in the table below.
Because VeriSign is fair valued, its long-term stock return is likely to be close to the growth rate of its business, which has averaged 5.4% over the past three years. years and is expected to grow at 3.91% per year over the next three to five years. years.
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Companies with poor financial strength present investors with a high risk of permanent capital loss. To avoid a permanent loss of capital, an investor should do his research and consider the financial strength of a company before deciding to buy stocks. A company’s cash-to-debt ratio and interest coverage are both a great way to understand its financial strength. VeriSign has a cash-to-debt ratio of 0.66, which is worse than 77% of companies in the software industry. VeriSign’s overall financial strength is 2 out of 10, indicating that VeriSign’s financial strength is poor. Here is VeriSign’s debt and cash flow for the past several years:
It is less risky to invest in profitable companies, especially those whose profitability is constant over the long term. A business with high profit margins is generally a safer investment than one with low profit margins. VeriSign has been profitable 10 in the past 10 years. In the past twelve months, the company reported sales of $ 1.3 billion and earnings of $ 5.52 per share. Its operating margin is 64.91%, which ranks better than 99% of companies in the software industry. Overall, VeriSign’s profitability is ranked 8 out of 10, indicating strong profitability. Here is VeriSign’s revenue and bottom line for the past few years:
Growth is probably one of the most important factors in the valuation of a business. GuruFocus research has found that growth is closely tied to the long-term performance of a company’s stocks. If a company’s business is growing, the business typically creates value for its shareholders, especially if the growth is profitable. Likewise, if the income and profits of a business decrease, the value of the business will decrease. VeriSign’s 3-year average revenue growth rate is within the average for companies in the Software industry. VeriSign’s 3-year average EBITDA growth rate is 6.6%, which is in line with the average for companies in the software industry.
A company’s profitability can also be assessed by comparing its return on invested capital (ROIC) to its weighted average cost of capital (WACC). Return on Invested Capital (ROIC) measures the extent to which a business generates cash flow relative to the capital it has invested in its business. The weighted average cost of capital (WACC) is the rate that a company should pay on average to all its security holders to finance its assets. If the return on invested capital exceeds the weighted average cost of capital, the company is likely to create value for its shareholders. Over the past 12 months, VeriSign’s ROIC is 48.82 while its WACC is 6.86. VeriSign’s historical ROIC vs WACC comparison is shown below:
In conclusion, the VeriSign stock (NAS: VRSN, 30-year Financials) is considered to be fairly valued. The company’s financial situation is bad and its profitability is strong. Its growth is in the mid-range of companies in the software industry. To learn more about the VeriSign share, you can view its 30-year financial data here.
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