Monday, May 21, 2012

A Quality Value Play: J2 Global Communications

By Jin She:

J2 Global Communications (JCOM) is a ~$1.1B market cap company that provides cloud-based communication services to business customers. The company helps corporations digitize various business communications (fax, phone, and online voice messaging) and deliver on-line service infrastructure to reduce corporate capital spending.

In my opinion, JCOM stock is undervalued and represents a great buying opportunity in a value investment that offers the popular cloud computing theme. In this article, I will run you through the firm?s historical financial performance and my DCF valuation, as well as provide you the recent corporate development to support my view on the stock.

Historical Financial Performance

(click to enlarge images)

Comments: JCOM has experienced healthy revenue growth since 2007. The firm is very profitable as reflected by its ~80% gross profit margin and ~40% operating income margin. It is also a cash generator as free cash flow margin has grown steadily from ~35% in

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