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The success of an enterprise is a direct function of the efficiency of its communications. There is an outfit in Los Angeles that provides expert help with the messaging end of the game.
j2 Global Communications Inc. (NASDAQ:JCOM) provides outsourced messaging and communications services. Clients can retrieve e-mails, faxes, and voice mails from a single phone line that handles unlimited incoming messages and may be used in conference calling. Customers include paid subscribers and advertising-supported free subscribers. The firm's network spans more than 2,000 cities in 35 countries.
The company pleased investors earlier in the week, when it filed earnings report that had been delayed by an investigation into the timing of stock options. Results included Q3 EPS of 29 cents (28 cent consensus), Q3 revenues of $45.9 million ($46.1M consensus), Q4 EPS of 36 cents (28 cent consensus) and Q4 revenues of $48.9 million ($48.2M consensus). Management also guided Q1 EPS to 32-33 cents (31 cent consensus) Q1 revenues to $51.1-$52.1 million ($51.7M consensus), Y07 EPS to $1.35-$1.45 ($1.38 consensus) and Y07 revenues to $217-$229 million ($222M consensus). Jefferies and RBC Capital Markets subsequently declared the stock a "buy" and issued price targets of $31 and $33, respectively.
The stock popped through 50-day, 90-day and 200-day moving average resistance on the news and then began defining a "bullish" flag consolidation pattern. Stocks often leave flags moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.
Altogether, brokers now recommend the shares with four "strong buys", four "buys", one "hold" and one "sell". Analysts expect a 24 percent growth rate, through the next year. The JCOM Price to Free Cash Flow ratio (24.29), Sales Growth rate (25.06%), EPS Growth rate (38.46%), Operating Margin (40.92%), Net Profit Margin (33.56%), Return on Assets (25.01%), Return on Investment (27.20%) and Return on Equity (27.24%) compare favorably with industry, sector and S&P 500 averages.
Institutional investors hold about 95% of the outstanding shares. The stock is one of those used to calculate the S&P 600 SmallCap Index. Through the past twelve months, it has traded between $20.40 and $32.00. A stop-loss of $23.95 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.
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