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VeriSign (VRSN) to Report Q4 Earnings: What's in the Cards?

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VeriSign (VRSN - Free Report) is set to report fourth-quarter 2019 results on Feb 6.

The Zacks Consensus Estimate for fourth-quarter earnings has been steady at $1.34 over the past 30 days, implying 15.2% decline from the figure reported in the year-ago quarter.

The consensus mark for revenues is pegged at $310.4 million, indicating an increase of 1% from the year-ago quarter reported figure.

VeriSign reported third-quarter 2019 non-GAAP earnings of $1.36 per share that beat the Zacks Consensus Estimate by 3.8% and increased 10.6% from the year-ago quarter.

Notably, the company’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 10.8%.

VeriSign, Inc. Price and EPS Surprise

VeriSign, Inc. Price and EPS Surprise

VeriSign, Inc. price-eps-surprise | VeriSign, Inc. Quote

Let’s see how things have shaped up for the upcoming announcement.

Factors to Note

Growth in .com and .net domain name registrations is likely to have benefited the company’s performance in the to-be-reported quarter.

Notably, VeriSign has been benefiting from its “exclusive” contract with ICANN for .com, .net and .name generic top-level domains (gTLDs). It is the sole registry operator for the .com and .net domain names through Nov 30, 2024 and Jun 30, 2023, respectively.

Per Amendment 35 to the agreement (dated Oct 26, 2018), VeriSign can raise the maximum price for a .com domain without further DOC approval by 7% in the final four years of each six-year period (the latest six-year period began on Oct 26, 2018).

Notably, the company ended third-quarter 2019 with 157.4 million .com and .net domain name registrations, up 3.8% year over year. The figure reflects a net increase of 1.27 million registrations during the quarter.

VeriSign processed 9.9 million new domain name registrations for .com and .net compared with 9.5 million in the year-ago quarter. Markedly, renewal rates are not fully measurable until 45 days after the end of the quarter.

Per VeriSign’s latest “The Domain Name Industry Brief” report, domain name registrations increased 5.1 million or 1.4% sequentially to 359.8 million across top-level domains (TLDs) at the end of the third quarter. Domain name registrations increased 17.4 million or 5.1% year over year.

However, increasing operating expenses related to research and development and sales and marketing are likely to have weighed on the company’s fourth-quarter bottom-line performance.

What Our Model Says

According to the Zacks model, the combination of two key ingredients — a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — increases the odds of a positive earnings surprise. But that’s not the case here.

VeriSign has an Earnings ESP of 0.00% and a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are few stocks you may want to consider, as our model shows that these have the right combination of elements to deliver an earnings beat.

Perion Network (PERI - Free Report) has an Earnings ESP of +22.58% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.    

Bruker Corporation (BRKR - Free Report) has an Earnings ESP of +0.86% and a Zacks Rank #2.

CDW Corporation (CDW - Free Report) has an Earnings ESP of +2.34% and a Zacks Rank #2.

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