Yahoo Finance Earnings are growing at VeriSign (NASDAQ:VRSN) but shareholders still don't like its prospects
The simplest way to benefit from a rising market is to buy an index fund. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. Investors in VeriSign, Inc. (NASDAQ:VRSN) have tasted that bitter downside in the last year, as the share price dropped 16%. That contrasts poorly with the market return of 23%. Even if shareholders bought some time ago, they wouldn't be particularly happy: the stock is down 14% in three years. Furthermore, it's down 11% in about a quarter. That's not much fun for holders.
After losing 3.6% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.
See our latest analysis for VeriSign
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
Even though the VeriSign share price is down over the year, its EPS actually improved. It could be that the share price was previously over-hyped.
It's surprising to see the share price fall so much, despite the improved EPS. But we might find some different metrics explain the share price movements better.
VeriSign managed to grow revenue over the last year, which is usually a real positive. Since the fundamental metrics don't readily explain the share price drop, there might be an opportunity if the market has overreacted.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
We know that VeriSign has improved its bottom line lately, but what does the future have in store? You can see what analysts are predicting for VeriSign in this interactive graph of future profit estimates.
A Different Perspective
Investors in VeriSign had a tough year, with a total loss of 16%, against a market gain of about 23%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 0.8% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand VeriSign better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for VeriSign you should be aware of, and 1 of them is potentially serious.
Of course VeriSign may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
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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.
