VeriSign's Shares Surged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Share prices popped 10% at Internet domain-name registrar VeriSign (NAS: CRIC) today. Yet the catalyst for this move was a strange one: CFO Brian Robins cancelled a scheduled appearance at a Citigroup conference.

So what: Kinda strange, huh? So here's the skinny: Barring some sudden onset of illness, the theory du jour is that Robins is keeping mum because some major corporate announcement is in the offing. Forbes thinks it's a takeover. Bloomberg proffers the theory that the company is getting all hands on board to announce a new CEO. Whatever it is, the news sounds big.

Now what:Not big enough to justify buying shares in the company without knowing what's up, however. Oh, I realize the price looks tempting -- 7 P/E, 16% growth rate ... a no-brainer, right? But think before you act: VeriSign sells this cheap for a reason, and one of the reasons is that the company's supposed earnings (the "E" in P/E) aren't all they're cracked up to be. Despite reporting profit of $775 million last year, VeriSign actually generated only $900 thousand in free cash flow during the period.

Long story short: VeriSign's news may well turn out to be good -- but its stock price isn't.

What does VeriSign have to say for itself?Add the stock to your Watchlistand find out.

At the time thisarticle was published Fool contributorRich Smithdoes not own (or short) shares of any company named above. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has adisclosure policy.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.