Analyzing j2 Global (JCOM) and Verizon Communications (VZ)

j2 Global (NASDAQ: JCOM) and Verizon Communications (NYSE:VZ) are both mid-cap computer and technology companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, institutional ownership, valuation, earnings, analyst recommendations, dividends and profitability.

Insider and Institutional Ownership

63.2% of Verizon Communications shares are held by institutional investors. 5.2% of j2 Global shares are held by insiders. Comparatively, 0.1% of Verizon Communications shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares j2 Global and Verizon Communications’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
j2 Global 12.60% 26.43% 11.11%
Verizon Communications 12.80% 58.66% 6.13%

Dividends

j2 Global pays an annual dividend of $1.58 per share and has a dividend yield of 2.1%. Verizon Communications pays an annual dividend of $2.36 per share and has a dividend yield of 4.5%. j2 Global pays out 58.5% of its earnings in the form of a dividend. Verizon Communications pays out 60.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. j2 Global has raised its dividend for 10 consecutive years.

Analyst Ratings

This is a breakdown of recent ratings and target prices for j2 Global and Verizon Communications, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
j2 Global 0 1 3 0 2.75
Verizon Communications 0 18 7 0 2.28

j2 Global presently has a consensus target price of $101.75, suggesting a potential upside of 35.90%. Verizon Communications has a consensus target price of $51.59, suggesting a potential downside of 2.24%. Given j2 Global’s stronger consensus rating and higher probable upside, analysts plainly believe j2 Global is more favorable than Verizon Communications.

Volatility & Risk

j2 Global has a beta of 0.87, suggesting that its stock price is 13% less volatile than the S&P 500. Comparatively, Verizon Communications has a beta of 0.57, suggesting that its stock price is 43% less volatile than the S&P 500.

Valuation & Earnings

This table compares j2 Global and Verizon Communications’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
j2 Global $874.26 million 4.15 $152.43 million $2.70 27.73
Verizon Communications $125.98 billion 1.71 $13.13 billion $3.90 13.53

Verizon Communications has higher revenue and earnings than j2 Global. Verizon Communications is trading at a lower price-to-earnings ratio than j2 Global, indicating that it is currently the more affordable of the two stocks.

Summary

j2 Global beats Verizon Communications on 9 of the 17 factors compared between the two stocks.

j2 Global Company Profile

j2 Global, Inc. is a provider of services delivered through the Internet. The Company provides cloud services to businesses of all sizes, from individuals to enterprises. The Company operates in two segments: Business Cloud Services and Digital Media. The Company’s Digital Media business segment consists of the Web properties and business operations of Ziff Davis, Inc. (Ziff Davis). The Company’s cloud services and solutions include fax, voice and unified communications, email and customer relationship management, online backup, global network and operations, and customer support services. In February 2013, it acquired IGN Entertainment, Inc. On November 9, 2012, the Company acquired Ziff Davis. Effective March 18, 2013, it acquired MetroFax Inc. In April 2013, the Company acquired Backup Connect BV.

Verizon Communications Company Profile

Verizon Communications Inc. is a holding company. The Company, through its subsidiaries, provides communications, information and entertainment products and services to consumers, businesses and governmental agencies. Its segments include Wireless and Wireline. The Wireless segment offers communications products and services, including wireless voice and data services and equipment sales, to consumer, business and government customers across the United States. The Wireline segment offers voice, data and video communications products and services, such as broadband video, data center and cloud services, security and managed network services, and local and long distance voice services. The Company has combined Yahoo! Inc.’s operating assets with its existing AOL Inc. business to create a new subsidiary, Oath Inc., owns a diverse house of more than 50 media and technology brands. The Oath portfolio includes HuffPost, Yahoo Sports, AOL.com, MAKERS, Tumblr, Yahoo Finance and Yahoo Mail.

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