VeriSign Bonds
| VRSN Stock | USD 185.55 0.43 0.23% |
VeriSign holds a debt-to-equity ratio of -3.2. VeriSign's financial risk is the risk to VeriSign stockholders that is caused by an increase in debt. In other words, with a high degree of financial leverage come high-interest payments, which usually reduce Earnings Per Share (EPS).
Given that VeriSign's debt-to-equity ratio measures a Company's obligations relative to the value of its net assets, it is usually used by traders to estimate the extent to which VeriSign is acquiring new debt as a mechanism of leveraging its assets. A high debt-to-equity ratio is generally associated with increased risk, implying that it has been aggressive in financing its growth with debt. Another way to look at debt-to-equity ratios is to compare the overall debt load of VeriSign to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, VeriSign is said to be less leveraged. If creditors hold a majority of VeriSign's assets, the Company is said to be highly leveraged.
VeriSign |
VeriSign Bond Ratings
VeriSign bond ratings play a critical role in determining how much VeriSign have to pay to access credit markets, i.e., the amount of interest on their issued debt. The threshold between investment-grade and speculative-grade ratings has important market implications for VeriSign's borrowing costs.| Piotroski F Score | 5 Healthy |
| Beneish M Score | -1.57 Possible Manipulator |
VeriSign Debt to Cash Allocation
As VeriSign follows its natural business cycle, the capital allocation decisions will not magically go away. VeriSign's decision-makers have to determine if most of the cash flows will be poured back into or reinvested in the business, reserved for other projects beyond operational needs, or paid back to stakeholders and investors. Many companies eventually find out that there is only so much market out there to be conquered, and adding the next product or service is only half as profitable per unit as their current endeavors. Eventually, the company will reach a point where cash flows are strong, and extra cash is available but not fully utilized. In this case, the company may start buying back its stock from the public or issue more dividends.
The company currently holds 1.8 B in liabilities. VeriSign has a current ratio of 0.94, indicating that it has a negative working capital and may not be able to pay financial obligations when due. Debt can assist VeriSign until it has trouble settling it off, either with new capital or with free cash flow. So, VeriSign's shareholders could walk away with nothing if the company can't fulfill its legal obligations to repay debt. However, a more frequent occurrence is when companies like VeriSign sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for VeriSign to invest in growth at high rates of return. When we think about VeriSign's use of debt, we should always consider it together with cash and equity.VeriSign Assets Financed by Debt
Typically, companies with high debt-to-asset ratios are said to be highly leveraged. The higher the ratio, the greater risk will be associated with the VeriSign's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of VeriSign, which in turn will lower the firm's financial flexibility. Like all other financial ratios, a a VeriSign debt ratio should be compared their industry average or other competing firms.VeriSign Corporate Bonds Issued
VeriSign issues bonds to finance its operations. Corporate bonds make up one of the most significant components of the U.S. bond market and are considered the world's largest securities market. VeriSign uses the proceeds from bond sales for a wide variety of purposes, including financing ongoing mergers and acquisitions, buying new equipment, investing in research and development, buying back their own stock, paying dividends to shareholders, and even refinancing existing debt. Most VeriSign bonds can be classified according to their maturity, which is the date when VeriSign has to pay back the principal to investors. Maturities can be short-term, medium-term, or long-term (more than ten years). Longer-term bonds usually offer higher interest rates but may entail additional risks.
Understaning VeriSign Use of Financial Leverage
VeriSign financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures VeriSign's total debt position, including all of outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of VeriSign assets, the company is considered highly leveraged. Understanding the composition and structure of overall VeriSign debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business and if it is worth investing in it. Financial leverage can amplify the potential profits to VeriSign's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of VeriSign's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets).
VeriSign, Inc., together with its subsidiaries, provides domain name registry services and internet infrastructure that enables internet navigation for various recognized domain names worldwide. VeriSign, Inc. was incorporated in 1995 and is headquartered in Reston, Virginia. Verisign operates under SoftwareInfrastructure classification in the United States and is traded on NASDAQ Exchange. It employs 902 people. Please read more on our technical analysis page.
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Analyzing currently trending equities could be an opportunity to develop a better portfolio based on different market momentums that they can trigger. Utilizing the top trending stocks is also useful when creating a market-neutral strategy or pair trading technique involving a short or a long position in a currently trending equity.When determining whether VeriSign offers a strong return on investment in its stock, a comprehensive analysis is essential. The process typically begins with a thorough review of VeriSign's financial statements, including income statements, balance sheets, and cash flow statements, to assess its financial health. Key financial ratios are used to gauge profitability, efficiency, and growth potential of Verisign Stock. Outlined below are crucial reports that will aid in making a well-informed decision on Verisign Stock:Check out the analysis of VeriSign Fundamentals Over Time. To learn how to invest in VeriSign Stock, please use our How to Invest in VeriSign guide.You can also try the Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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When running VeriSign's price analysis, check to measure VeriSign's market volatility, profitability, liquidity, solvency, efficiency, growth potential, financial leverage, and other vital indicators. We have many different tools that can be utilized to determine how healthy VeriSign is operating at the current time. Most of VeriSign's value examination focuses on studying past and present price action to predict the probability of VeriSign's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move VeriSign's price. Additionally, you may evaluate how the addition of VeriSign to your portfolios can decrease your overall portfolio volatility.
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Is VeriSign's industry expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of VeriSign. If investors know VeriSign will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about VeriSign listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
The market value of VeriSign is measured differently than its book value, which is the value of VeriSign that is recorded on the company's balance sheet. Investors also form their own opinion of VeriSign's value that differs from its market value or its book value, called intrinsic value, which is VeriSign's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because VeriSign's market value can be influenced by many factors that don't directly affect VeriSign's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between VeriSign's value and its price as these two are different measures arrived at by different means. Investors typically determine if VeriSign is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, VeriSign's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.
What is Financial Leverage?
Financial leverage is the use of borrowed money (debt) to finance the purchase of assets with the expectation that the income or capital gain from the new asset will exceed the cost of borrowing. In most cases, the debt provider will limit how much risk it is ready to take and indicate a limit on the extent of the leverage it will allow. In the case of asset-backed lending, the financial provider uses the assets as collateral until the borrower repays the loan. In the case of a cash flow loan, the general creditworthiness of the company is used to back the loan. The concept of leverage is common in the business world. It is mostly used to boost the returns on equity capital of a company, especially when the business is unable to increase its operating efficiency and returns on total investment. Because earnings on borrowing are higher than the interest payable on debt, the company's total earnings will increase, ultimately boosting stockholders' profits.Leverage and Capital Costs
The debt to equity ratio plays a role in the working average cost of capital (WACC). The overall interest on debt represents the break-even point that must be obtained to profitability in a given venture. Thus, WACC is essentially the average interest an organization owes on the capital it has borrowed for leverage. Let's say equity represents 60% of borrowed capital, and debt is 40%. This results in a financial leverage calculation of 40/60, or 0.6667. The organization owes 10% on all equity and 5% on all debt. That means that the weighted average cost of capital is (.4)(5) + (.6)(10) - or 8%. For every $10,000 borrowed, this organization will owe $800 in interest. Profit must be higher than 8% on the project to offset the cost of interest and justify this leverage.Benefits of Financial Leverage
Leverage provides the following benefits for companies:- Leverage is an essential tool a company's management can use to make the best financing and investment decisions.
- It provides a variety of financing sources by which the firm can achieve its target earnings.
- Leverage is also an essential technique in investing as it helps companies set a threshold for the expansion of business operations. For example, it can be used to recommend restrictions on business expansion once the projected return on additional investment is lower than the cost of debt.