November 23, 2023
Top 10 Stock VeriSign Hold Recommendation

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For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).

360° View: Obermatt 360° View VeriSign Hold

360 METRICS	November 23, 2023
VALUE
VALUE	38
GROWTH
GROWTH	22
SAFETY
SAFETY	21
SENTIMENT
SENTIMENT	98
360° VIEW
360° VIEW	27

ANALYSIS: With an Obermatt 360° View of 27 (better than 27% compared with alternatives), overall professional sentiment and financial characteristics for the stock VeriSign are below the industry average. The 360° View is based on consolidating four consolidated indicators, with three out of four indicators below average for VeriSign. The consolidated Sentiment Rank has a good rank of 98, which means that professional investors are more optimistic about the stock than for 98% of alternative investment opportunities. But all other ranks are below average. The consolidated Value Rank has a rank of 38, which means that the share price of VeriSign is on the higher side compared with typical size in indicators such as revenues, profits, and invested capital. The consolidated Growth Rank also has a low rank of 22, meaning that the company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, invested capital growth, and stock returns. This means that growth is lower than for 22% of competitors in the same industry. Finally, the consolidated Safety Rank has a riskier rank of 21 which means that the company has a riskier financing structure than 79% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. ...read more

RECOMMENDATION: With a consolidated 360° View of 27, VeriSign is worse than 73% of all alternative stock investment opportunities based on the Obermatt Method. As only the professional market sentiment (Sentiment Rank of 98) is above-average, and all other consolidated Obermatt Ranks are below peers, the stock investing proposition case is rather weak. The stock price is expensive for a company of this size in this industry, visible in the below-average Value Rank. Growth is below the competition based on the Growth Rank, and the company has more debt than other companies, according to the Safety Rank. So the question becomes: How important is the Sentiment Rank when all others are below average? When it comes to growth, the low rating might be justified if growth is expected in the future and not yet reflected in current performance. This is often the case for companies with intellectual property, such as technology and pharmaceutical companies. In the early phases, these companies are expensive compared with their size and may have a lot of debt on their books, as is the case here, as seen in the low Value and Safety Ranks. Future growth may be the strongest investment rationale in this case, which is only reflected by institutional investors' opinions. You pay more than the market average for this stock and invest in a rather debt-loaded enterprise, but it may be worth it if the future of VeriSigṇ is bright. A small investment might be justified, but proceed with caution. ...read more

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Sentiment Strategy: Professional Market Sentiment for VeriSign very positive

SENTIMENT METRICS	November 23, 2023
ANALYST OPINION
ANALYST OPINION	42
OPINIONS CHANGE
OPINIONS CHANGE	94
PRO HOLDINGS
PRO HOLDINGS	92
MARKET PULSE
MARKET PULSE	79
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	98

ANALYSIS: With an Obermatt Sentiment Rank of 98 (better than 98% compared with alternatives) for 2023, overall professional sentiment and engagement for the stock VeriSign is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for VeriSign. Analyst Opinions are at a rank of 42 (worse than 58% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 94, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in VeriSign. Even better, the Professional Investors rank is 92, meaning that professional investors hold more stock in this company than in 92% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 79, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 79% of competitors). ...read more

RECOMMENDATION: With a consolidated Sentiment Rank of 98 (more positive than 98% compared with investment alternatives), VeriSign has a reputation among professional investors that is significantly higher than that of its competitors. While analysts are still critical of the company, some are changing their minds. In addition, the professional news channels are optimistic, and many institutional investors have already bought stock in the company. These are encouraging signals, despite the still lower level of analyst recommendations. They may be due to a problematic past, and about to change. The positive sentiment signals are stronger than the negative. ...read more

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Value Strategy: VeriSign Stock Price Value below-average critical

VALUE METRICS	November 23, 2023
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	1
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	58
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	100
DIVIDEND YIELD
DIVIDEND YIELD	1
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	38

ANALYSIS: With an Obermatt Value Rank of 38 (worse than 62% compared with alternatives), VeriSign shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for VeriSign. Price-to-Profit (also referred to as price-earnings, P/E) is 58 which means that the stock price compared with what market professionals expect for future profits is lower than for 58% of comparable companies, indicating a good value concerning VeriSign's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 100, which means that the stock price is lower as regards to invested capital than for 100% of comparable investments. On the other hand, Price-to-Sales is less favorable than for 99% of alternatives (only 1% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than for 99% of comparable companies, making the stock more expensive compared with the company's expected dividend payouts. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 38, is a hold recommendation based on VeriSign's stock price compared with the company's operational size and dividend yields. This is a puzzling picture, because it means that profits are high while dividends are low. Since the stock price is low compared with invested capital but high concerning expected revenues, the company has more invested capital than peers for generating the same amount of revenue. Since profits are higher, it could be a "cash cow" situation (using the classic Boston Consulting Group or BCG matrix naming convention) where the company is on a downward trend, still living from the profits of past products. As the company pays low dividends, it may harbor the opinion that a turnaround is possible, and it rather invests the cash than distribute it to shareholders through dividends, thus sealing the company's fate early. Any investment optimism should only be a buy trigger once thorough research is completed. ...read more

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Growth Strategy: VeriSign Growth Momentum negative

GROWTH METRICS	November 23, 2023
REVENUE GROWTH
REVENUE GROWTH	45
PROFIT GROWTH
PROFIT GROWTH	37
CAPITAL GROWTH
CAPITAL GROWTH	12
STOCK RETURNS
STOCK RETURNS	55
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	22

ANALYSIS: With an Obermatt Growth Rank of 22 (better than 22% compared with alternatives), VeriSign shows one of the most restricted growth dynamics in its industry. There is little momentum in this company. The Growth Rank is based on consolidating four value indicators, with three out of four indicators below average for VeriSign. Sales Growth has a below market rank of 45, which means that, currently, professionals expect the company to grow less than 55% of its competitors. The same is valid for Capital Growth, with a rank of 12, and Profit Growth, with a rank of 37. Currently, professionals expect the company to grow its profits less than 63% of its competitors). Only shareholders are optimistic. Stock Returns are above average at a rank of 55, which means that the stock returns have recently been above 55% of alternative investments. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 22, is a sell recommendation for growth and momentum investors. That picture may be the result for a company that has reached the bottom. All went south for VeriSign, and it still looks bad, but some investors already see light at the end of the tunnel, rewarding the stock with recent above-market stock returns. It could also mean that investors are correcting an overreaction to negative news. If that were the case, the positive stock returns are not yet a sign of recovery. Investors should look closely at the Value and Sentiment indicators before they make a stock purchasing decision, because growth is unlikely to be the driving argument behind this investment. ...read more

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Safety Strategy: VeriSign Debt Financing Safety risky

SAFETY METRICS	November 23, 2023
LEVERAGE
LEVERAGE	1
REFINANCING
REFINANCING	16
LIQUIDITY
LIQUIDITY	95
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	21

ANALYSIS: With an Obermatt Safety Rank of 21 (better than 21% compared with alternatives), the company VeriSign has much riskier financing practices than comparable other companies, which means that their overall debt burden is significantly above the industry average. This doesn't mean that the business of VeriSign is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with just one indicator above average for VeriSign. Liquidity is at 95, meaning the company generates more profit to service its debt than 95% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 16, which means that the portion of the debt that is about to be refinanced is above average. It has more debt in the refinancing stage than 84% of its competitors. Leverage is also high at a rank of 1, which means that the company has an above-average debt-to-equity ratio. It has more debt than 99% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 21 (worse than 79% compared with alternatives), VeriSign has a financing structure that is significantly riskier than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usually indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. ...read more

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Combined financial peformance: VeriSign Lowest Financial Performance

COMBINED PERFORMANCE	November 23, 2023
VALUE
VALUE	38
GROWTH
GROWTH	22
SAFETY
SAFETY	95
COMBINED
COMBINED	1

ANALYSIS: With an Obermatt Combined Rank of 1 (worse than 99% compared with investment alternatives), VeriSign (Internet Services & Infrastructure, USA) shares have lower financial characteristics compared with similar stocks. Shares of VeriSign are low in value (priced high) with a consolidated Value Rank of 38 (worse than 62% of alternatives), show below-average growth (Growth Rank of 22), and are riskily financed (Safety Rank of 21), which means above-average debt burdens. ...read more

RECOMMENDATION: A Combined Rank of 1, is a sell recommendation based on VeriSign's financial characteristics. As the company VeriSign's key financial metrics all exhibit below-average performance, such as low value (Obermatt Value Rank of 38), low growth (Obermatt Growth Rank of 22), and risky financing practices (Obermatt Safety Rank of 21), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. Such poor financial performance sometimes indicates that the company's business is all concentrated in some distant future. This is sometimes the case for high-tech or biotechnology companies. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and risky today. In such cases, the Obermatt Method has limited value as it is based on facts we can observe today. If the facts are all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that should only amount to a small fraction of a safe portfolio. ...read more

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