JCOM - Embedded Expectations Analysis - 2020 07 10
J2 Global, Inc. (JCOM:USA) currently trades well below corporate averages relative to UAFRS-based (Uniform) earnings, with a 9.8x Uniform P/E. At these levels, the market has bearish expectations for the firm, but management is confident about their growth initiatives, various products and platforms, and cancellation ratesSpecifically, management generated excitement markers when saying they are funding key growth initiatives at the company given their strong balance sheet and free cash flow, and that they have identified four longer-term themes emerging from the crisis that are important to them. In addition, they are confident their Consensus platform will be important as health care moves to the cloud, and that Sugarsync and IPVanish will be bundled together at the same price. Moreover, they are confident cancellations were higher during the Great Recession
j2 Global is holding company. Through its subsidiaries, the company provides internet services. The company manages its operations through two business segments: Cloud Services and Digital Media. The company's Cloud Services provides the following cloud services and solutions: fax; voice; backup; security; email marketing products; IP licensing; global network and operations; and customer support services. The company's Digital Media properties and services include the following: technology; gaming; healthcare; display and video advertising; and tools and services.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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