Rating Change #4
VeriSign Incorporated (VRSN) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, revenue growth and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and feeble growth in the company's earnings per share.
Highlights from the ratings report include:
- Net operating cash flow has decreased to $12.95 million or 49.89% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet Software & Services industry. The net income has significantly decreased by 130.1% when compared to the same quarter one year ago, falling from $35.21 million to -$10.61 million.
- The gross profit margin for VERISIGN INC is currently very high, coming in at 85.80%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -5.60% is in-line with the industry average.
- VRSN's revenue growth trails the industry average of 26.3%. Since the same quarter one year prior, revenues rose by 12.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Despite the fact that VRSN's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.16 is high and demonstrates strong liquidity.
VeriSign, Inc. provides Internet infrastructure services to various networks worldwide. The company provides domain name registry services and network intelligence and availability (NIA) services. The company has a P/E ratio of 68.1, above the average computer software & services industry P/E ratio of 6.9 and above the S&P 500 P/E ratio of 17.7. VeriSign has a market cap of $5.5 billion and is part of the technology sector and computer software & services industry. Shares are down 2% year to date as of the close of trading on Friday.You can view the full VeriSign Ratings Report or get investment ideas from our investment research center.
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