On Dec 30, 2015, we issued an updated research report on j2 Global Inc. JCOM. For fiscal 2015, management expects total revenue in the band of $690–$724 million. Non-GAAP earnings per share are projected in the $3.73–$4.13 range.
Last year, j2 Global has delivered positive earnings surprises in all four quarters, with an average beat of 11.05%. The company outpaced the Zacks Consensus Estimate for both the top and bottom line in third-quarter 2015.
j2 Global completed nine acquisitions in the third quarter of 2015. In the month of March, the company closed the takeover of online file backup, synchronization and sharing assets of SugarSync, Inc. The acquisition has duly aided the expansion of the company's cloud backup business.
j2 Global expects to capitalize on increasing demand for cloud-based, value-added communication, messaging and data backup services. Segment wise, j2 Global continues to improve its most powerful eFax brand with creative content and designs. Strong free cash flow and low leverage have helped the company execute nine buyouts in 2015.
However, j2 Global’s business largely relies on capacity, affordability, reliability and security of its telecommunication networks. The company’s business is also dependent on a small number of telecommunication carriers in each geographic region. Thus, the company’s operations will suffer if it is unable to obtain or retain telephone numbers or is prohibited from acquiring local numbers.
Furthermore, we believe that j2 Global’s acquisition spree may not only lead to integration risk but also exert pressure on the company’s cash flow, going ahead.
j2 Global currently carries a Zacks Rank #3 (Hold).
Stocks that Warrant a Look
Better-ranked stocks in the Internet/Application software industry include Cvent, Inc. CVT, HubSpot, Inc. HUBS and King Digital Entertainment plc KING. While Cvent carries a Zacks Rank #1 (Strong Buy), the other two hold a Zacks Rank #2 (Buy).
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