Here’s Why Verisign Stock Has Underperformed The S&P Since 2020
Verisign Inc. (NASDAQ: VRSN) stock price has lost 19% from around $216 at 2020 end to $174 currently, primarily due to unfavorable changes in its P/S multiple. During this period, the company witnessed a 13% rise in revenues, and a 4% drop in the outstanding share count positively impacting the company’s revenue per share. Despite this, the company’s stock price has dropped, and it has underperformed the S&P 500, which returned around 10% over the same period.
In our interactive dashboard, Why Verisign Stock Moved: VRSN Stock Has Lost 19% Since 2020, we break down the factors behind this move.
(A) VRSN’s Total Revenue has risen 13% from $1.3 billion in FY 2020 to $1.4 billion currently
- Verisign’s total revenue has risen steadily from $1.3 billion in FY ’21 to $1.4 billion on an LTM basis.
- 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 every year over the past decade.
- For additional details about VRSN’s revenues and comparison to peers, see Verisign (VRSN) Revenue Comparison
- Pick VeriSign Stock Over Gen Digital
- Will VeriSign Stock Recover To Its 2021 Highs of Around $250?
- Down 15% This Year Is Verisign Stock A Better Pick Over F5 Networks?
- Despite 40% Rise This Year Is Akamai Stock A Better Pick Than VeriSign?
- Is FirstEnergy A Better Pick Than Verisign Stock?
- How Has VeriSign Stock Performed During The 2022-23 Inflation Shock?
(B) Revenue per share (RPS) increased 19% from $10.99 in FY 2020 to $13.03 currently
- VRSN’s revenue rose from $1.3 billion in FY 2020 to $1.4 billion currently, and the outstanding share count dropped from 115.1 million in FY 2020 to around 110.1 million currently.
- Due to this, RPS has risen 19% from $10.99 in FY ’20 to $13.03 currently.
(C) Price-To-Sales (P/S) multiple for VRSN rose initially from 18.7x in 2020 to 20.9x by 2021 end, but has pulled back to 13.4x currently, much lower than its 2020 level
- VRSN’s P/S multiple rose strongly to around 20.9x 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 13.4x.
- For additional details about the company stock returns and comparison to peers, see Verisign (VRSN) Stock Return Comparison.
What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.
| Returns | Jun 2022 MTD [1] |
2022 YTD [1] |
2017-22 Total [2] |
| VRSN Return | 3% | -29% | 137% |
| S&P 500 Return | 1% | -12% | 87% |
| Trefis Multi-Strategy Portfolio | 3% | -16% | 230% |
[1] Month-to-date and year-to-date as of 6/2/2022
[2] Cumulative total returns since the end of 2016
Invest with Trefis Market Beating Portfolios
See all Trefis Price Estimates