VeriSign Inc (VRSN)

Conclusion

VeriSign operates the domain name registry for .com and .net, and maintains two of the thirteen internet root servers. At 305.84 USD on 2026-11-09, the market capitalisation is 27.43 billion USD and the enterprise value is 28.74 billion USD.

The verdict is overvalued. The P/E is 32.3x against its ten-year median of 29.2x, and EV/EBITDA is 23.7x against 21.9x. The DCF gives 215.90 USD per share at a discount rate of 8.9%, and the fair value from historical multiples is 285.27 USD. The fair value band runs from 200.47 to 300.70 USD with a midpoint of 250.59 USD, a margin of safety of -18.1% at the current price. The reverse DCF implies growth of 9.4% a year, against a five-year revenue CAGR of 5.5% and a five-year free cash flow per share CAGR of 14.1%.

The strongest numbers are free cash flow conversion of 1.20x over the trailing twelve months, a Piotroski score of 8 out of 9, and an operating margin of 67.6%. The weakest are the Altman Z-score of -3.91, a current ratio of 0.42, and the Ohlson model's insolvency estimate of about 99.7%. The price also sits above the top of the fair value band, at 305.84 USD against 300.70 USD.

Financial health

Financial health is red, held back by the liquidity and insolvency readings and supported by debt service. The current ratio is 0.42 and the quick ratio is 0.35, both at 2026-09-30. Net debt to EBITDA is 1.08x and interest coverage is 15.2x on a trailing basis, both assessed good. Debt to equity is not available because equity is negative. The Altman Z-score is -3.91, in the distress zone, though the model was designed for manufacturers and this company is not one. Insolvency risk: high, about 99.7% by the estimate of the Ohlson model over one to two years, with an Ohlson score of 5.84 as of 2025-12-31.

Earnings quality

Earnings quality is green, supported by cash conversion and a shrinking share count. Free cash flow conversion is 1.20x on a trailing basis and 1.11x over five years. The accrual ratio is -0.19, and stock-based compensation is 0.4% of revenue, leaving free cash flow after it at 1.02 billion USD. The share count fell at a five-year CAGR of -4.3%, which reflects buybacks. The Piotroski score is 8 out of 9. The Beneish M-score is not available. Over the last eight quarters the company beat earnings estimates five times and missed three times, with an average surprise of 13.9%. Current-year estimates have been cut, with four downward revisions and no upward revisions in the last 30 days. Next-year estimates rose 1.3% over 90 days.

Profitability

Profitability is green, with all three margins close to their ten-year medians. The gross margin is 88.6% against a median of 85.7%, the operating margin is 67.6% against 65.4%, and the net margin is 49.1% against 49.8%. Operating margin stability is 0.04. ROIC is not available because invested capital is not positive, so the spread to WACC cannot be stated. The WACC is 8.6%, built from a cost of equity of 8.9%, a cost of debt of 4.9% and a tax rate of 22.7%. Return on equity is not available given negative equity. The 2025 DuPont split shows a net margin of 49.8% and an asset turnover of 1.25x.

Growth

Growth is green, based on consistent revenue growth and the outlook for next year, while long-run rates are modest. Revenue has grown in all 10 of 10 comparable years. Its compound growth is 5.2% over three years, 5.5% over five and 4.6% over ten. EPS compounds at 12.6% over three years, 4.8% over five and 12.2% over ten. Free cash flow per share grew 15.7% over three years, 14.1% over five and 9.7% over ten. The consensus estimate for next year's EPS growth is 15.0%, which is a forecast rather than a delivered figure.

Valuation

Valuation is red, with the verdict overvalued and every available multiple above its ten-year median. The P/E is 32.3x against 29.2x, a premium of 10.5%. EV/EBITDA is 23.7x against 21.9x, a premium of 8.3%. Price to sales is 15.8x against 15.0x, a premium of 5.7%. Price to free cash flow is 26.8x against 26.6x, a premium of 0.6%. Price to book has no history. The DCF gives 215.90 USD per share at a discount rate of 8.9%, with first-stage growth of 5.5% and terminal growth of 2.5%. The fair value from historical multiples is 285.27 USD. The fair value band runs from 200.47 to 300.70 USD, with a midpoint of 250.59 USD and a margin of safety of -18.1%. The dividend yield is 1.1%, with a payout of 28.5% of free cash flow. The fair value figures are estimates built on fixed assumptions, not a price target.

Risks

The main risks sit in the balance sheet and in the price. A current ratio of 0.42 leaves little liquid buffer against short-term obligations. If free cash flow conversion, now 1.20x, fell back, the insolvency and distress readings would carry more weight. The price already sits above the top of the fair value band, and the reverse DCF implies 9.4% growth, well above the 5.5% revenue CAGR of the past five years. Return on invested capital, return on equity, debt to equity, the Beneish M-score and price to book are not available, so those parts of the picture rest on other measures. This analysis has no debt maturity schedule and no revenue by segment, and the Altman model does not suit a company of this type.