VeriSign Inc. Stock Buy Recommendation Reiterated (VRSN)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- VeriSign (Nasdaq: VRSN) has been reiterated by TheStreet Ratings as a buy with a ratings score of B-. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, 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.

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Highlights from the ratings report include:
  • VERISIGN INC reported significant earnings per share improvement 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 ($2.28 versus $1.91).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 96.3% when compared to the same quarter one year prior, rising from $53.81 million to $105.64 million.
  • VRSN's revenue growth trails the industry average of 29.8%. Since the same quarter one year prior, revenues rose by 13.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The gross profit margin for VERISIGN INC is currently very high, coming in at 88.30%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 45.89% significantly outperformed against the industry average.
  • Net operating cash flow has increased to $170.76 million or 37.47% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -2.32%.

VeriSign, Inc. provides Internet infrastructure services worldwide. It offers registry services that operate the authoritative directory of .com, .net, .cc, .tv, and .name domain names, as well as the back-end systems for various .gov, .jobs, and .edu domain names. VeriSign has a market cap of $6.9 billion and is part of the technology sector and telecommunications industry. The company has a P/E ratio of 24.00, above the S&P 500 P/E ratio of 18.00. Shares are up 16.8% 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.

--Written by a member of TheStreet Ratings Staff.

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