3 Reasons to Sell VRSN and 1 Stock to Buy Instead

Core Viewpoint - VeriSign's shares have declined by 16.4% to $240.20 over the last six months, contrasting with the S&P 500's 19.5% gain, raising questions about investment potential [1] Group 1: Revenue Growth - Long-term revenue growth for VeriSign has been disappointing, with a compounded annual growth rate of only 5.3% over the past five years, which is below the benchmark for the software sector [3] - Projected revenue growth for the next 12 months is expected to be 4.9%, closely aligning with the past five years' growth rate, indicating a lack of acceleration in new products and services [5] Group 2: Profitability Metrics - VeriSign's operating margin has remained relatively stable over the last two years, with a trailing 12-month operating margin of 67.6%, raising concerns about the company's expense management [7] - The company prioritizes GAAP operating margin over stock-based compensation adjustments, reflecting a focus on real expenses related to talent acquisition and retention [6] Group 3: Investment Valuation - The stock is currently trading at a forward price-to-sales ratio of 13.2, suggesting that a significant amount of positive news is already priced in, leading to a recommendation to explore better investment opportunities elsewhere, such as in Latin America's Amazon and PayPal [8]