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Why VeriSign (VRSN) Is Down Today

NEW YORK (TheStreet) -- VeriSign (VRSN) was losing 6.2% to $51.98 Friday following a mixed earnings report and a ratings downgrade from Citigroup.

In its fourth-quarter, VeriSign earned 58 cents a share, missing estimates by 2 cents. The company posted revenue of $245.6 million for the quarter, while analysts expected revenue of $244.7 million.

Looking to 2014, VeriSign expects revenue of between $1 billion and $1.02 billion for the year. Analysts estimate revenue of $1.03 billion for the year.

Following the earnings report Citigroup downgraded VeriSign to "sell" from "neutral."

Must read: VeriSign (VRSN) Is Today's Water-Logged And Getting Wetter Stock

TheStreet Ratings team rates VERISIGN INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate VERISIGN INC (VRSN) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, revenue growth, expanding profit margins and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 37.68% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, VRSN should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • VERISIGN INC has improved earnings per share by 15.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, VERISIGN INC increased its bottom line by earning $1.91 versus $0.84 in the prior year. This year, the market expects an improvement in earnings ($2.34 versus $1.91).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 17.2%. Since the same quarter one year prior, revenues slightly increased by 9.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The gross profit margin for VERISIGN INC is currently very high, coming in at 87.01%. Regardless of VRSN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, VRSN's net profit margin of 33.19% significantly outperformed against the industry.
  • Net operating cash flow has increased to $134.48 million or 10.57% when compared to the same quarter last year. Despite an increase in cash flow, VERISIGN INC's average is still marginally south of the industry average growth rate of 12.76%.
  • You can view the full analysis from the report here: VRSN Ratings Report

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