j2 Global's Acquisitions and Inorganic Strength Hold Promise - Analyst Blog

On Dec 9, 2014, we issued an updated research report on j2 Global Inc. (JCOM). 

 

j2 Global delivered positive earnings surprises in all four quarters last year, with an average beat of 8.05%. The company reported strong financial results for the third quarter of fiscal 2014 with both the top and the bottom line beating the Zacks Consensus Estimate.

 

j2 Global delivers integrated communications services through its unique digital faxing and voice messaging systems. Several enterprises are now increasingly utilizing digital faxing services to reduce costs while improving security, thereby helping j2 Global to generate strong business.

 

Recently, j2 Global acquired Australian web hosting provider, Web24 Group Pty Ltd, which is expected to help the company expand its web hosting business in Australia as well as other countries. 

 

j2 Global also acquired Excel Micro Inc., the Philadelphia-based distributor of cloud email security and archiving solutions. The deal will help the company gain control over 3,500 marketing partners of Excel Micro worldwide.

 

However, j2 Global's business largely depends on the capacity, affordability, reliability and security of its telecommunication networks. The company's business is dependent on a small number of telecommunication carriers in each geographic region. Thus, j2 Global's operations will be significantly hurt if it is unable to obtain or retain telephone numbers or is prohibited from acquiring local numbers.

 

Moreover, continuous execution of strategic acquisitions coupled with regular dividend payments will likely escalate debts for the company while moving ahead.

 

j2 Global currently carries a Zacks Rank #2 (Buy).

 

Stocks That Warrant a Look

 

Other stocks worth considering in the Internet/Application software industry include Attunity, Ltd. (ATTU), DTS Inc. (DTSI) and Qualys, Inc. (QLYS). All three stocks currently sport a Zacks Rank #1 (Strong Buy).