Critical Analysis: VeriSign (NASDAQ:VRSN) and Sabre (NASDAQ:SABR)

Sabre (NASDAQ:SABR) and VeriSign (NASDAQ:VRSN) are both computer and technology companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, institutional ownership, earnings, analyst recommendations, risk, dividends and valuation.

Risk & Volatility

Sabre has a beta of 1.07, meaning that its stock price is 7% more volatile than the S&P 500. Comparatively, VeriSign has a beta of 0.78, meaning that its stock price is 22% less volatile than the S&P 500.

Dividends

Sabre pays an annual dividend of $0.56 per share and has a dividend yield of 34.4%. VeriSign pays an annual dividend of $3.08 per share and has a dividend yield of 1.2%. Sabre pays out 45.5% of its earnings in the form of a dividend. VeriSign pays out 35.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Analyst Ratings

This is a summary of current ratings and target prices for Sabre and VeriSign, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sabre	3	3	2	0	1.88
VeriSign	0	3	2	1	2.67

Sabre presently has a consensus target price of $3.80, suggesting a potential upside of 133.13%. VeriSign has a consensus target price of $281.67, suggesting a potential upside of 12.69%. Given Sabre’s higher possible upside, equities research analysts plainly believe Sabre is more favorable than VeriSign.

Valuation & Earnings

This table compares Sabre and VeriSign”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sabre	$3.03 billion	0.21	-$278.76 million	$1.23	1.33
VeriSign	$1.63 billion	14.24	$785.70 million	$8.58	29.13

VeriSign has lower revenue, but higher earnings than Sabre. Sabre is trading at a lower price-to-earnings ratio than VeriSign, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Sabre and VeriSign’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sabre	19.11%	N/A	-1.90%
VeriSign	49.86%	-40.66%	57.26%

Institutional & Insider Ownership

89.4% of Sabre shares are owned by institutional investors. Comparatively, 92.9% of VeriSign shares are owned by institutional investors. 2.3% of Sabre shares are owned by company insiders. Comparatively, 0.8% of VeriSign shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Summary

VeriSign beats Sabre on 10 of the 16 factors compared between the two stocks.

About Sabre

Sabre Corporation, together with its subsidiaries, operates as software and technology company for travel industry in the United States, Europe, Asia-Pacific, and internationally. It operates through two segments: Travel Solutions and Hospitality Solutions. The Travel Solutions segment operates a business-to-business travel marketplace that offers travel content, such as inventory, prices, and availability from a range of travel suppliers, including airlines, hotels, car rental brands, rail carriers, cruise lines, and tour operators with a network of travel buyers comprising online and offline travel agencies, travel management companies, and corporate travel departments. This segment provides a portfolio of software technology products and solutions through software-as-a-service (SaaS) and hosted delivery models to airlines and other travel suppliers. Its products include reservation systems for carriers, commercial and operations products, agency solutions, and data-driven intelligence solutions. Its Hospitality Solutions segment provides software and solutions to hoteliers through SaaS and hosted delivery models. Sabre Corporation was incorporated in 2006 and is headquartered in Southlake, Texas.

About VeriSign

VeriSign, Inc., together with its subsidiaries, provides domain name registry services and internet infrastructure that enables internet navigation for various recognized domain names worldwide. The company enables the security, stability, and resiliency of internet infrastructure and services, including providing root zone maintainer services, operating two of thirteen internet root servers; and offering registration services and authoritative resolution for the .com and .net domains, which supports global e-commerce. It operates directory for .name and .cc; and back-end systems for .edu, domain names. VeriSign, Inc. was incorporated in 1995 and is headquartered in Reston, Virginia.