Is There Now An Opportunity In VeriSign, Inc. (NASDAQ:VRSN)?

Today we're going to take a look at the well-established VeriSign, Inc. (NASDAQ:VRSN). The company's stock saw a decent share price growth of 19% on the NASDAQGS over the last few months. The recent jump in the share price has meant that the company is trading around its 52-week high. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s examine VeriSign’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for VeriSign

Is VeriSign Still Cheap?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 3.75% above our intrinsic value, which means if you buy VeriSign today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is $202.13, there’s only an insignificant downside when the price falls to its real value. What's more, VeriSign’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What does the future of VeriSign look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a negative profit growth of -0.2% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for VeriSign. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Currently, VRSN appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on VRSN for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on VRSN should the price fluctuate below its true value.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. When we did our research, we found 2 warning signs for VeriSign (1 is potentially serious!) that we believe deserve your full attention.

If you are no longer interested in VeriSign, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.