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j2 Global (JCOM) Down 10.2% Since Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for j2 Global, Inc. (JCOM - Free Report) . Shares have lost about 10.2% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is itdue for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Second quarter earnings

j2 Global's first-quarter 2017 earnings (on an adjusted basis) of $1.14 per share (including stock-based compensation expenses) missed the Zacks Consensus Estimate by 7 cents. However, earnings increased 11.76% on a year-over-year basis, on the back of higher revenues.
j2 Global's first-quarter 2017 earnings (on an adjusted basis) of $1.14 per share (including stock-based compensation expenses) missed the Zacks Consensus Estimate by 7 cents. However, earnings increased 11.76% on a year-over-year basis, on the back of higher revenues.
j2 Global's first-quarter 2017 earnings (on an adjusted basis) of $1.14 per share (including stock-based compensation expenses) missed the Zacks Consensus Estimate by 7 cents. However, earnings increased 11.76% on a year-over-year basis, on the back of higher revenues.
j2 Global, Inc.’s second-quarter 2017 earnings (excluding 70 cents from non-recurring items) of $1.33 per share missed the Zacks Consensus Estimate by 3 cents. However, earnings increased 9.9% on a year-over-year basis on the back of higher revenues.
 
Quarterly revenues came in at $273.2 million, up 29% year over year. However, the top line fell short of the Zacks Consensus Estimate marginally.

Segment-wise, total Cloud Service revenues inched up 1.4% year over year to $143.4 million in the reported quarter. Digital Media revenues came in at $128.5 million, up 85.4%. IP Licensing revenues were up 18.2% to $1.3 million in the second quarter of 2017.
 
j2 Global’s operating expenses were $171.5 million in the quarter under review, up 46.2% from the same period, last year. Quarterly adjusted EBITDA (earnings before interest and other expenses) rose 13.0% year over year to $110.2 million.
 
j2 Global exited the second quarter of 2017 with approximately $330.7 million in cash and cash equivalents compared with $123.9 million at the end of 2016. Long-term debt at the end of second-quarter 2017 was $996.4 million compared with $601.7 million at the previous year-end. Free cash flow at the end of the reported quarter climbed 12.0% year over year to $71.1 million. 
 
Outlook
 
The company expects earnings per share (on an adjusted basis) in the band of $5.60-$6.00 for full-year 2017, unchanged from its preceding guidance. The prediction for revenues has also been reiterated in the range of $1.13-$1.17 billion.
 
The company expects non-GAAP effective tax rate for 2017 (exclusive of the release of reserves for uncertain tax positions) to be in the range 28.5-30.5%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter.

j2 Global, Inc. Price and Consensus

 

j2 Global, Inc. Price and Consensus | j2 Global, Inc. Quote

VGM Scores

At this time, j2 Global's stock has an nice Growth Score of B, while it is lagging a lot on the momentum front with D.  The stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Based on our scores, the stock is suitable for value and growth investors.

Outlook

Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift.  The stcok has a Zacks Rank #4 (Sell). We are expecting a below average return from the stock in the next few months.




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