VERISIGN INC/CA (VRSN): what the price requires
At today's price, VERISIGN INC/CA (VRSN) is priced for +15.5% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/VRSN
Headline
| Field | Value |
|---|---|
| Ticker | VRSN |
| Company | VERISIGN INC/CA |
| Current price | $270.71/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 46.0% |
| Operating margin today | 68.1% |
| Margin compression implied | -22.1pp |
| Implied growth | 15.5% |
| Multiple paid | 23x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 8.5% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~7.4pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | +0.15σ |
| cohort percentile (of 177 peers) | 41 |
| sustained it ~5 years at this level | 50% |
| implied end-window share | 0% |
Valuation X-Ray
Every valuation family lands below the price. The price therefore requires assumptions beyond what those standard frames encode.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | — | 0 | — |
| Earnings | 2.66x | 2 | expensive |
| Relative | 1.37x | 2 | expensive |
| Growth | — | 0 | — |
Families that call it expensive: Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.6%); the inversion above states its own rate.
Per-Model Detail (n=4)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $248.33 | 1.09x | no | FCF base $1.1B, growth 7% (input: historical growth), terminal g 4.0%, WACC 8.6%, 5yr projection |
| DCF Exit Multiple | Growth | $263.49 | 1.03x | no | Exit EV/EBITDA: 20.6x / 22.6x / 24.6x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $146.68 | 1.85x | yes | P/S fallback (negative EPS): Sector P/S 8.0x × TTM revenue — excluded from consensus |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | — | — | no | — |
| Two-Stage Excess Return | Asset | — | — | no | — |
| Discounted Future Market Cap | Growth | $112.75 | 2.40x | no | Rev $1.7B, growth 7% (input: historical growth; tapered), Terminal P/S: 6.7x / 8.0x / 9.3x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $0.00 | — | no | Negative/zero EPS — earnings-based value floored at $0 |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $77.78 | 3.48x | no | Normalized EBIT (5y avg op income, one-time charges added back) $1.01B × (1−23%) / WACC 8.6% → EPV (no growth) |
| Residual Income | Asset | — | — | no | — |
| Graham Number | Asset | — | — | no | — |
| EV/EBITDA Relative | Relative | $301.73 | 0.90x | yes | EBITDA $1.17B × sector EV/EBITDA 25.0x |
| FCF Yield | Earnings | $105.95 | 2.56x | yes | FCF $1048.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $97.56 | 2.77x | yes | SBC-adj FCF $0.98B (FCF $1.05B − SBC $0.07B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | — | — | no | — |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | $146.68 | 1.85x | no | Revenue $1.68B × sector P/S 8.0x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | — | — | no | — |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $1.2b |
| Net debt / NOPAT (after-tax) | 1.42x |
| Net debt / operating income (pre-tax) | 1.09x |
| Interest coverage | 14.7x |
| Share count CAGR (buyback) | -4.5% |
| Burning cash | no |
Bullet Takeaways
- VeriSign operates the .com and .net domain registries, a government-sanctioned monopoly over a core piece of internet infrastructure. The economics are extraordinary: a 67.9% operating margin, and a record domain base of 176.1 million names in Q1 2026, up 3.7% year over year.
- The model has two levers, both favorable right now. Domain growth accelerated enough that management raised full-year base-growth guidance to 3.1% to 4.3%, and the company gave notice of a $0.71 increase in the wholesale .com price to $10.97, effective November 1, 2026, the first allowed since early 2024.
- The price asks a lot for that quality. At $264.83 the market pays about 22 times operating income, which implies operating growth around 15% a year for five years, well above the mid-single-digit domain-plus-pricing math the registry actually produces. No standard valuation frame reaches the current price.
Bull Case
The honest place to start is how far the price sits above the valuation methods, because for VeriSign that distance is the whole debate. No valuation family in the X-ray reaches $264.83 (June 28, 2026); the earnings-power family lands at well under half the price and the peer-multiple family below it too. Yet this is one of the highest-quality businesses in the market, so the question is whether the methods are simply too blunt to price what VeriSign is. It is a government-sanctioned monopoly: under its registry agreements with ICANN it collects a fee per .com and .net registration, and its 10-K describes registrars as its direct customers contracting under those agreements. The result is a 67.9% operating margin, interest covered fifteen times, and a recurring revenue stream as close to an annuity as exists in technology. Standard valuation frames systematically understate a toll booth on the internet.
The two levers that drive the business are both working. Demand for .com and .net pushed the domain base to a record 176.1 million names, up 3.7% year over year, with the highest new registrations since 2021, helped in part by AI-related activity, strong enough that management raised full-year base-growth guidance from a range starting at 1.5% to one of 3.1% to 4.3%. On top of volume comes price: VeriSign gave notice of a $0.71 increase in the wholesale .com fee to $10.97 effective November 1, 2026, its first since early 2024, and its agreements permit 7% annual .com increases in the final four years of the term. Volume growth plus contractual pricing power is a rare combination, and it is exactly what compounds a registry's revenue.
The capital return turns the monopoly's cash into per-share value with unusual consistency. VeriSign returned about $1.13 billion to shareholders over the trailing four quarters, $843 million in buybacks and $289 million in dividends, and raised the dividend 5.2% to $0.81 a share. Because the share count keeps shrinking, each year's registry cash lands on fewer shares. The .com Registry Agreement was renewed by ICANN with presumptive renewal rights running the current term to 2030, removing a key overhang. The analyst consensus is a buy with targets ranging into the low-to-mid three hundreds. The bull case is simple and durable: a regulated monopoly with accelerating volume, contractual pricing, and a relentless buyback, priced by methods that cannot capture a franchise this defensible.
Bear Case
The disruption risk for a registry is not a rival registry, it is the political and regulatory machinery that grants the monopoly in the first place, and that machinery is stirring. The pricing power the bull case prizes exists only because the 2018 Cooperative Agreement lets VeriSign raise .com fees, and that arrangement is increasingly contested. Senator Elizabeth Warren has publicly argued that the .com monopoly enables predatory pricing that far outpaces the actual cost of running the registry, and the National Telecommunications and Information Administration has signaled a desire for price reductions even while it remains legally bound by the current agreement. The single most leveraged variable on this thesis is therefore not domain volume but Washington: a future renegotiation that caps or rolls back pricing would strike directly at the highest-margin part of the model, and the company itself warns in its 10-K that changes or challenges to the pricing provisions in the .com Registry Agreement could materially harm its business.
The structural challenge underneath is that domains are a slow-growth market in absolute terms. The base grew 3.7%, which is good for a registry but is not technology growth, and the long-run trend in how people find businesses, through apps, social platforms, search and increasingly AI assistants rather than typed-in .com addresses, raises a quiet question about whether the domain name remains as central a digital asset in a decade. The first-quarter acceleration is encouraging, but a mature, single-product franchise has limited organic levers beyond price, and price is exactly what regulators are eyeing.
That collision with the valuation is what makes the price hard to defend. At 22 times operating income the price embeds roughly 15% annual operating growth for five years, far above the mid-single-digit volume-plus-pricing math the registry produces, and no valuation family reaches the quote. The market is paying a premium that assumes both the volume acceleration and the full pricing schedule persist undisturbed. A telling signal sits in the ownership: Berkshire Hathaway, a long-time holder since 2012, sold about a third of its stake, roughly 4.3 million shares around $285, cutting its position to 9.6% from 14.2%. When a patient, quality-focused owner trims a monopoly at a price near the current level, it is at least a reminder that even a wonderful business can be fully valued, and that the regulatory tail risk is not free.
Valuation
VeriSign is the rare monopoly whose price the standard methods cannot reach. At $264.83 the market pays about 22 times company-wide operating income, which under an 8.6% cost of capital and 4% terminal growth solves to operating growth of roughly 15% a year over five years. No valuation family in the X-ray reaches the price: it is rich on earnings power, where the family lands at well under half the quote, and on peer multiples. The reliability on the solve is reasonable, so the implied figure carries weight, and that figure is the crux: 15% implied growth is far above what a registry that grows its base 3% to 4% and raises price toward 7% can mechanically produce.
The counterargument is real, which is why the price is not absurd. VeriSign's 67.9% operating margin, near-zero capital intensity, and contractual, recurring revenue are economics that justify a premium the conventional methods, built for ordinary businesses, will always flag as expensive. The franchise also converts essentially all of its profit to cash and returns it, so the per-share growth runs ahead of the headline revenue growth as the share count shrinks. A toll booth on the internet legitimately deserves more than a market multiple.
The honest synthesis is that the price already capitalizes the monopoly close to perfection and leaves no room for the regulatory risk that is unique to it. The implied 15% growth is a stretch even before accounting for the political pressure on .com pricing, and the analyst targets, ranging from the high two-hundreds into the mid three-hundreds, bracket the price with the bullish end assuming the pricing schedule runs undisturbed. Berkshire trimming a third of a long-held stake near these levels is a quiet vote that the price is full. The conclusion is that this is a superb business at a demanding price: the return depends on both the volume acceleration and the contractual price increases persisting, against a backdrop where the body that grants the pricing power is being lobbied to take some of it back.
Catalysts
The recurring catalyst is the domain base and the pricing schedule. Q1 2026 set a record at 176.1 million .com and .net names, up 3.7% year over year with the strongest new registrations since 2021, and management raised full-year base-growth guidance to 3.1% to 4.3% and revenue guidance to $1.73 billion to $1.745 billion. The other lever is the $0.71 wholesale .com price increase to $10.97 effective November 1, 2026, with the agreement permitting 7% annual increases in the final four years of the term. Each quarter's net domain additions and the timing of price increases are the direct drivers.
The defining swing factor is regulatory. The .com Registry Agreement was renewed by ICANN with presumptive renewal rights to 2030, which removed a major overhang, but pricing remains contested: Senator Warren has criticized the monopoly pricing and the NTIA has signaled a preference for price reductions, even as it is bound by the current Cooperative Agreement. Any move to renegotiate or cap .com pricing would be the most important catalyst for the stock, in either direction, because pricing is the highest-margin lever.
Capital return and ownership round out the picture. VeriSign returned about $1.13 billion to shareholders over the trailing four quarters and raised the dividend 5.2% to $0.81, so the buyback pace against the share price is a steady driver. On sentiment, Berkshire Hathaway sold about a third of its long-held stake near $285, a notable marker, while the analyst consensus remains a buy with targets ranging into the low-to-mid three hundreds. A continuation of the volume acceleration alongside undisturbed pricing is what would justify the premium the price embeds.
Peer Cohorts (Per Segment, With Filing Citations)
Domain name registry (single segment) (reported)
- GDDY (GoDaddy Inc.)
- (no filing in the citation store)
- FDS (FACTSET RESEARCH SYSTEMS INC.)
- (no filing in the citation store)
- VRSK (Verisk Analytics, Inc.)
- (no filing in the citation store)
- CLVT (CLARIVATE PLC)
- (no filing in the citation store)
- EVTC (EVERTEC, Inc.)
- (no filing in the citation store)
- CSGS (CSG SYSTEMS INTERNATIONAL, INC.)
- (no filing in the citation store)
- JKHY (JACK HENRY & ASSOCIATES, INC.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.