Can j2 Global (JCOM) Surprise This Earnings Season? - Analyst Blog

j2 Global Inc. JCOM, a leading provider of unified messaging capabilities, is slated to report its first-quarter 2014 results after the closing bell on May 8, 2014.

In the last quarter, the company had delivered an 11.6% positive earnings surprise. Let us have a brief look at the factors likely to influence the upcoming earnings results.

Factors at Play This Quarter

Record revenue growth, lower churn rate, higher EBITDA and free cash flow will continue to act as tailwinds for the company in the first quarter. The improving performance can primarily be attributed to the company's diversification into cloud business, installation of a media business and initiation of the intellectual property program.

On the flip side, j2 Global's business remains sensitive to overall macroeconomic factors, particularly weakness in credit markets. The company has a vast majority of credit-sensitive customers from the lending and mortgage industries and other financial institutions. Although revenues from these sources reflect a growing trend, we are apprehensive that future estimates may become volatile due to global economic challenges.

Earnings Whispers?

Our proven model does not conclusively show that j2 Global is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. Unfortunately, this is not the case here as elaborated below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate are poised at 67 cents. Hence, the ESP is 0.00%.

Zacks Rank: j2 Global has a Zacks Rank #3 (Hold).

We caution investors against this stock approaching the earnings announcement, as a Zacks Earnings ESP of 0.00% combined with a Zacks Rank #3 makes surprise prediction difficult.

Note that Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.

Other Stocks to Consider

Here are some other companies you might consider as our model shows these have the right combination of elements to post an earnings beat this quarter.

Constant Contact, Inc. CTCT, with earnings ESP of +20.0% and a Zacks Rank #2 (Buy).

Scripps Networks Interactive, Inc. SNI, with earnings ESP of +1.24% and a Zacks Rank #3 (Hold).

AMC Networks Inc. AMCX with earnings ESP of +0.89% and a Zacks Rank #3 (Hold).