Is VeriSign, Inc. (NASDAQ:VRSN) Potentially Undervalued?

Today we're going to take a look at the well-established VeriSign, Inc. (NASDAQ:VRSN). The company's stock received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$193 at one point, and dropping to the lows of US$168. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether VeriSign's current trading price of US$182 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at VeriSign’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for VeriSign

What's The Opportunity In VeriSign?

According to our valuation model, VeriSign seems to be fairly priced at around 0.2% below our intrinsic value, which means if you buy VeriSign today, you’d be paying a fair price for it. And if you believe that the stock is really worth $182.34, then there’s not much of an upside to gain from mispricing. In addition to this, VeriSign has a low beta, which suggests its share price is less volatile than the wider market.

What kind of growth will VeriSign generate?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of VeriSign, it is expected to deliver a relatively unexciting earnings growth of 4.2%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.

What This Means For You

Are you a shareholder? It seems like the market has already priced in VRSN’s future outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on VRSN, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Every company has risks, and we've spotted 3 warning signs for VeriSign (of which 1 shouldn't be ignored!) you should know about.

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.