Verizon Communications (VZ) versus j2 Global (JCOM) Critical Comparison

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

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Verizon Communications and j2 Global, as reported by MarketBeat.

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

Verizon Communications presently has a consensus target price of $51.59, indicating a potential downside of 3.01%. j2 Global has a consensus target price of $101.75, indicating a potential upside of 36.49%. Given j2 Global’s stronger consensus rating and higher probable upside, analysts plainly believe j2 Global is more favorable than Verizon Communications.

Valuation & Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Verizon Communications $125.98 billion 1.72 $13.13 billion $3.90 13.64
j2 Global $874.26 million 4.13 $152.43 million $2.70 27.61

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.

Insider and Institutional Ownership

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

Dividends

Verizon Communications pays an annual dividend of $2.36 per share and has a dividend yield of 4.4%. j2 Global pays an annual dividend of $1.58 per share and has a dividend yield of 2.1%. Verizon Communications pays out 60.5% of its earnings in the form of a dividend. j2 Global pays out 58.5% 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. Verizon Communications has raised its dividend for 10 consecutive years. Verizon Communications is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

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

Profitability

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

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

Summary

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

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.

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.

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