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Reasons to Keep VeriSign (VRSN) Stock on Your Watchlist

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VeriSign (VRSN - Free Report) is benefiting from growth in .com and .net domain name registrations.

The company’s 2022 and 2023 revenues are anticipated to rise 7.1% and 7.9%, respectively, while earnings are expected to rise 9.6% and 11.7%, respectively.
VRSN outpaced estimates in three of the trailing four quarters, delivering an earnings surprise of 3.3%, on average.

In the last reported quarter, VeriSign delivered adjusted earnings of $1.43 per share, which beat the Zacks Consensus Estimate by 2.9% and increased 7.5% year over year. Revenues rose 7.2% year over year to $346.9 million and beat the Zacks Consensus Estimate by 1.1%.

For the second quarter, the Zacks Consensus Estimate for revenues and earnings is pegged at $348.8 million and $1.52 per share, indicating year over year growth of 5.9% and 16% respectively.

The company also has an impressive Growth Score of A. This style score consolidates all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth.

The stock is down 30.5% from its 52-week high level of $257.03 on Dec 30, 2021, making it relatively affordable for investors. VRSN has lost 22.1% in the past year against a 36.4% decline of the Zacks sub-industry.

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Strong Fundamentals

Based in Reston, VA, VeriSign Inc. provides Internet infrastructure services, including domain name registry services and infrastructure assurance services. Its only reportable segment includes Registry Services.

The renewal of the .com contract and price hikes for the .com and .net domain names remain drivers of VeriSign’s top-line growth. An expected increase in domain name base is the key catalyst. The company is expected to benefit from growing Internet consumption globally.

On Jul 1, 2022, VeriSign announced that domain name registrations increased 13.2 million or 3.9% year over year to 350.5 million across all top-level domains at the end of first-quarter 2022. Domain name registrations increased 8.8 million or 2.6% sequentially.

However, surging expenses may prove to be a drag on profitability. Stiff competition from the likes of Google’s free public domain name service and a high debt burden are concerns for this Zacks Rank #3 (Hold) stock.

Stocks to Consider

A few better-ranked stocks from the broader technology sector worth consideration are Synopsys (SNPS - Free Report) , Aspen Technology (AZPN - Free Report) and Broadcom (AVGO - Free Report) . All stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Broadcom’s fiscal 2022 earnings is pegged at $37.06 per share, up 4% in the past 60 days. AVGO’s long-term earnings growth rate is pegged at 14.5%.

Broadcom’s earnings beat the Zacks Consensus Estimate in all the preceding four quarters, with the average being 2.2%. Shares of AVGO have gained 2.6% of their value in the past year.

The Zacks Consensus Estimate for Synopsys 2022 earnings is pegged at $8.47 per share, rising 7.2% in the past 60 days. The long-term earnings growth rate is anticipated to be 19.6%.

Synopsys earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 2.7%. Shares of SNPS have increased 14% in the past year.

The Zacks Consensus Estimate for Aspen’s fiscal 2022 earnings is pegged at $5.50 per share, rising 1.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 18.4%.

Aspen’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, the average being 4.1%. Shares of AZPN have grown 30.5% in the past year.

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