VeriSign vs Gen Digital: Performance and Profitability Compared

In a recent report, the comparison between VeriSign and Gen Digital highlights key trends affecting their stock valuations. Despite VeriSign's better profitability and financial position, Gen Digital showcases superior revenue growth, indicating complex dynamics for investors.

Date: 09-10-2024

AI Rating: 6

The analysis highlights the contrasting performances of VeriSign (NASDAQ: VRSN) and Gen Digital (NASDAQ: GEN) in relation to their stock prices and associated metrics. Notably, while both companies have seen recent fluctuations, VeriSign has consistently found itself trailing behind the S&P 500 index, indicating underperformance. In particular, from January 2021 to now, VRSN has declined by 15%, while GEN has increased by 25%, showcasing GEN’s relatively better market performance.

Revenue Growth: VeriSign reported a revenue growth of 6% from $1.3 billion in 2020 to $1.5 billion in 2023. In stark contrast, Gen Digital's revenue soared at a higher rate of 14%, from $2.6 billion to $3.8 billion over the same period. Furthermore, forecasts indicate that VeriSign's sales may rise to $1.7 billion, while Gen's might grow to $4.3 billion, sustaining GEN’s revenue growth lead.

Profit Margins: In terms of profitability, VeriSign outshines Gen Digital. Its operating margin improved from 65% to 67% from 2020 to 2023, while Gen Digital faced a decline from 41% to 31% over the same timeframe. In the last twelve months, VeriSign's margin stands at a remarkable 68%, compared to a mere 32% for Gen, demonstrating VeriSign's superior ability to convert revenue into profit.

Financial Stability: The financial position analysis reveals that VeriSign retains a robust structure with only 10% debt as a percentage of equity, against Gen Digital's significant 50%. Additionally, VeriSign holds 46% cash as a portion of assets, providing greater financial resilience compared to Gen's 4% cash position. Hence, VeriSign’s financial prudence further solidifies its stature amongst investors.

Overall, this report indicates a trend that despite Gen Digital's favorable revenue growth, VeriSign's strong profitability metrics and better financial stability make it a potentially more attractive long-term investment. The comparative analysis also suggests that the valuation multiple gap is likely to persist in favor of VRSN in the upcoming years.

Stocks: VRSN GEN