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Could Revised Guidance Prove Profitable for J2 Global Investors?

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Cloud software services provider j2 Global (NASDAQ: JCOM) jumped more than 12 percent Monday after the company announced its preliminary second quarter 2012 financial results and a proposed $250 million in senior unsecured notes Monday before the opening bell.

More than four times the average volume of shares traded hands in the Monday session, at 1.72 million shares, and the stock closed Monday up 8.5 percent.

In the release, j2 Global announced second quarter revenue expectations of $88.8 million to $89.5 million, compared to its first quarter 2012 revenues of $85.7 million. Second quarter earnings per share (EPS) are expected to be between $0.66 and $0.68 versus analyst expectations of $0.64.

J2 Global's first quarter earnings release announced EPS of $0.60, beating analyst estimates of $0.57. The company's fourth quarter 2011 release however, disappointed analyst consensus by more than 13 percent - coming in at $0.51 versus $0.59.

Notably, j2 Global's boost in expectations differs from some of its software peers that have recently announced downward revisions and guidance related to the Eurozone and macroeconomic environment - such as Seagate Technologies (NASDAQ: STX), Qlik Technologies and Informatica (NASDAQ: INFA).

Of the six analysts covering the company, two recommend a Strong Buy, with one at Buy and the other three recommending Hold. The company has a short float of 28.49 percent.

J2 Global's market cap comes in at around 1.3 billion, dwarfing the market cap of related companies Vonage Holdings (NYSE: VG), Callwave (NASDAQ: CLWA) and Iridium Communications (NASDAQ: IRDM) but a far cry from Verizon Communication's (NYSE: VZ) and AT&T's (NYSE: T) 128.6 billion and 207.67 billion respective market caps.

Year-to-date at Monday closing levels, shares of j2 Global were up 1.17 percent. The shares reached an all-time high of around $36 in June 2007.

J2 Global does offer a dividend, and with a yield of more than 3 percent the company may offer value at current levels. The company also has a beta of 0.92, which means that shares will be less volatile than the overall market.

 

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