Intrinsic value of j2 Global, Inc. - JCOM

Previous Close

$89.01

  Intrinsic Value

$48.99

stock screener

  Rating & Target

sell

-45%

Previous close

$89.01

 
Intrinsic value

$48.99

 
Up/down potential

-45%

 
Rating

sell

We calculate the intrinsic value of JCOM stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 4.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  9.40
  8.96
  8.56
  8.21
  7.89
  7.60
  7.34
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.12
  6.01
  5.91
  5.82
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.32
  5.28
  5.26
  5.23
  5.21
Revenue, $m
  1,320
  1,439
  1,562
  1,690
  1,823
  1,962
  2,106
  2,256
  2,411
  2,573
  2,741
  2,916
  3,098
  3,287
  3,485
  3,691
  3,905
  4,129
  4,363
  4,607
  4,862
  5,129
  5,407
  5,699
  6,004
  6,323
  6,657
  7,007
  7,373
  7,757
Variable operating expenses, $m
  1,029
  1,120
  1,215
  1,314
  1,417
  1,524
  1,635
  1,751
  1,871
  1,996
  2,115
  2,250
  2,391
  2,537
  2,690
  2,848
  3,014
  3,187
  3,367
  3,556
  3,752
  3,958
  4,173
  4,398
  4,634
  4,880
  5,138
  5,408
  5,691
  5,987
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  1,029
  1,120
  1,215
  1,314
  1,417
  1,524
  1,635
  1,751
  1,871
  1,996
  2,115
  2,250
  2,391
  2,537
  2,690
  2,848
  3,014
  3,187
  3,367
  3,556
  3,752
  3,958
  4,173
  4,398
  4,634
  4,880
  5,138
  5,408
  5,691
  5,987
Operating income, $m
  291
  318
  347
  376
  406
  438
  471
  505
  540
  577
  625
  665
  707
  750
  795
  842
  891
  942
  996
  1,051
  1,110
  1,170
  1,234
  1,300
  1,370
  1,443
  1,519
  1,599
  1,683
  1,770
EBITDA, $m
  408
  445
  483
  522
  564
  606
  651
  697
  745
  795
  847
  901
  958
  1,016
  1,077
  1,141
  1,207
  1,276
  1,349
  1,424
  1,503
  1,585
  1,671
  1,761
  1,856
  1,954
  2,058
  2,166
  2,279
  2,398
Interest expense (income), $m
  21
  63
  72
  81
  91
  101
  111
  122
  133
  145
  157
  170
  183
  197
  211
  226
  242
  258
  275
  292
  311
  330
  350
  371
  392
  415
  439
  464
  491
  518
  547
Earnings before tax, $m
  229
  247
  265
  285
  305
  327
  349
  371
  395
  420
  455
  482
  510
  539
  569
  601
  633
  668
  703
  741
  780
  821
  863
  908
  955
  1,004
  1,055
  1,108
  1,165
  1,223
Tax expense, $m
  62
  67
  72
  77
  82
  88
  94
  100
  107
  113
  123
  130
  138
  146
  154
  162
  171
  180
  190
  200
  211
  222
  233
  245
  258
  271
  285
  299
  314
  330
Net income, $m
  167
  180
  194
  208
  223
  238
  254
  271
  288
  306
  332
  352
  372
  393
  415
  438
  462
  487
  513
  541
  569
  599
  630
  663
  697
  733
  770
  809
  850
  893

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  2,804
  3,055
  3,316
  3,589
  3,872
  4,166
  4,471
  4,789
  5,119
  5,462
  5,819
  6,191
  6,577
  6,980
  7,399
  7,836
  8,291
  8,767
  9,263
  9,781
  10,323
  10,889
  11,480
  12,099
  12,746
  13,424
  14,133
  14,876
  15,654
  16,469
Adjusted assets (=assets-cash), $m
  2,804
  3,055
  3,316
  3,589
  3,872
  4,166
  4,471
  4,789
  5,119
  5,462
  5,819
  6,191
  6,577
  6,980
  7,399
  7,836
  8,291
  8,767
  9,263
  9,781
  10,323
  10,889
  11,480
  12,099
  12,746
  13,424
  14,133
  14,876
  15,654
  16,469
Revenue / Adjusted assets
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
  0.471
Average production assets, $m
  1,079
  1,175
  1,276
  1,381
  1,490
  1,603
  1,721
  1,843
  1,970
  2,102
  2,239
  2,382
  2,531
  2,686
  2,847
  3,015
  3,191
  3,374
  3,565
  3,764
  3,972
  4,190
  4,418
  4,656
  4,905
  5,166
  5,439
  5,724
  6,024
  6,338
Working capital, $m
  -62
  -68
  -73
  -79
  -86
  -92
  -99
  -106
  -113
  -121
  -129
  -137
  -146
  -155
  -164
  -173
  -184
  -194
  -205
  -217
  -229
  -241
  -254
  -268
  -282
  -297
  -313
  -329
  -347
  -365
Total debt, $m
  1,159
  1,309
  1,465
  1,627
  1,795
  1,971
  2,153
  2,342
  2,539
  2,744
  2,956
  3,178
  3,408
  3,648
  3,898
  4,158
  4,430
  4,713
  5,009
  5,318
  5,640
  5,978
  6,330
  6,699
  7,085
  7,489
  7,911
  8,354
  8,818
  9,304
Total liabilities, $m
  1,671
  1,821
  1,977
  2,139
  2,307
  2,483
  2,665
  2,854
  3,051
  3,256
  3,468
  3,690
  3,920
  4,160
  4,410
  4,670
  4,942
  5,225
  5,521
  5,830
  6,152
  6,490
  6,842
  7,211
  7,597
  8,001
  8,423
  8,866
  9,330
  9,816
Total equity, $m
  1,133
  1,234
  1,340
  1,450
  1,564
  1,683
  1,806
  1,935
  2,068
  2,207
  2,351
  2,501
  2,657
  2,820
  2,989
  3,166
  3,350
  3,542
  3,742
  3,952
  4,170
  4,399
  4,638
  4,888
  5,150
  5,423
  5,710
  6,010
  6,324
  6,654
Total liabilities and equity, $m
  2,804
  3,055
  3,317
  3,589
  3,871
  4,166
  4,471
  4,789
  5,119
  5,463
  5,819
  6,191
  6,577
  6,980
  7,399
  7,836
  8,292
  8,767
  9,263
  9,782
  10,322
  10,889
  11,480
  12,099
  12,747
  13,424
  14,133
  14,876
  15,654
  16,470
Debt-to-equity ratio
  1.020
  1.060
  1.090
  1.120
  1.150
  1.170
  1.190
  1.210
  1.230
  1.240
  1.260
  1.270
  1.280
  1.290
  1.300
  1.310
  1.320
  1.330
  1.340
  1.350
  1.350
  1.360
  1.360
  1.370
  1.380
  1.380
  1.390
  1.390
  1.390
  1.400
Adjusted equity ratio
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  167
  180
  194
  208
  223
  238
  254
  271
  288
  306
  332
  352
  372
  393
  415
  438
  462
  487
  513
  541
  569
  599
  630
  663
  697
  733
  770
  809
  850
  893
Depreciation, amort., depletion, $m
  117
  126
  136
  147
  157
  169
  180
  192
  205
  218
  222
  236
  251
  266
  282
  299
  316
  334
  353
  373
  393
  415
  437
  461
  486
  511
  538
  567
  596
  627
Funds from operations, $m
  284
  306
  330
  355
  380
  407
  435
  463
  493
  524
  554
  588
  623
  659
  697
  737
  778
  821
  866
  913
  963
  1,014
  1,068
  1,124
  1,183
  1,244
  1,308
  1,376
  1,447
  1,521
Change in working capital, $m
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -11
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
Cash from operations, $m
  289
  312
  336
  361
  387
  413
  441
  470
  501
  532
  562
  596
  631
  668
  707
  747
  788
  832
  877
  925
  975
  1,026
  1,081
  1,137
  1,197
  1,259
  1,324
  1,392
  1,464
  1,539
Maintenance CAPEX, $m
  -98
  -107
  -116
  -126
  -137
  -148
  -159
  -170
  -182
  -195
  -208
  -222
  -236
  -251
  -266
  -282
  -299
  -316
  -334
  -353
  -373
  -393
  -415
  -437
  -461
  -486
  -511
  -538
  -567
  -596
New CAPEX, $m
  -92
  -97
  -101
  -105
  -109
  -113
  -118
  -122
  -127
  -132
  -137
  -143
  -149
  -155
  -161
  -168
  -175
  -183
  -191
  -199
  -208
  -218
  -228
  -238
  -249
  -261
  -273
  -286
  -299
  -314
Cash from investing activities, $m
  -190
  -204
  -217
  -231
  -246
  -261
  -277
  -292
  -309
  -327
  -345
  -365
  -385
  -406
  -427
  -450
  -474
  -499
  -525
  -552
  -581
  -611
  -643
  -675
  -710
  -747
  -784
  -824
  -866
  -910
Free cash flow, $m
  99
  108
  119
  130
  141
  153
  165
  178
  191
  205
  217
  231
  247
  263
  279
  297
  314
  333
  352
  373
  394
  415
  438
  462
  487
  513
  540
  568
  598
  629
Issuance/(repayment) of debt, $m
  146
  150
  156
  162
  169
  175
  182
  189
  197
  205
  213
  221
  230
  240
  250
  260
  272
  283
  296
  309
  323
  337
  353
  369
  386
  404
  423
  443
  464
  486
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  146
  150
  156
  162
  169
  175
  182
  189
  197
  205
  213
  221
  230
  240
  250
  260
  272
  283
  296
  309
  323
  337
  353
  369
  386
  404
  423
  443
  464
  486
Total cash flow (excl. dividends), $m
  245
  258
  275
  292
  310
  328
  347
  367
  388
  410
  429
  453
  477
  503
  529
  557
  586
  616
  648
  681
  716
  753
  791
  831
  873
  917
  963
  1,011
  1,061
  1,114
Retained Cash Flow (-), $m
  -97
  -101
  -106
  -110
  -114
  -119
  -123
  -128
  -133
  -139
  -144
  -150
  -156
  -163
  -169
  -177
  -184
  -192
  -200
  -209
  -219
  -229
  -239
  -250
  -262
  -274
  -287
  -300
  -314
  -329
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  148
  157
  169
  182
  195
  209
  224
  239
  255
  271
  285
  303
  321
  340
  360
  380
  402
  424
  448
  472
  497
  524
  552
  581
  611
  643
  676
  711
  747
  785
Discount rate, %
  5.00
  5.25
  5.51
  5.79
  6.08
  6.38
  6.70
  7.04
  7.39
  7.76
  8.14
  8.55
  8.98
  9.43
  9.90
  10.39
  10.91
  11.46
  12.03
  12.63
  13.27
  13.93
  14.63
  15.36
  16.13
  16.93
  17.78
  18.67
  19.60
  20.58
PV of cash for distribution, $m
  141
  141
  144
  145
  145
  144
  142
  139
  134
  128
  120
  113
  105
  96
  87
  78
  69
  60
  52
  44
  36
  30
  24
  19
  15
  11
  8
  6
  4
  3
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

j2 Global, Inc., together with its subsidiaries, is a provider of Internet services. The Company operates through two segments: Business Cloud Services and Digital Media. Through its Business Cloud Services Division, the Company provides cloud services to businesses of all sizes, from individuals to enterprises, and licenses its intellectual property (IP) to third parties. In addition, the Business Cloud Services Division includes its j2 Cloud Connect business, which is primarily focused on its voice and fax products. The Company's Digital Media Division specializes in the technology and gaming markets, reaching in-market buyers and influencers in both the consumer and business-to-business space. Its eFax and MyFax online fax services enable users to receive faxes into their e-mail inboxes and to send faxes through Internet. In addition to eFax, it offers online fax services under a range of alternative brands, including MyFax, eFax Plus, eFax Pro, eFax Corporate and eFax Developer. _tck('aft');

FINANCIAL RATIOS  of  j2 Global, Inc. (JCOM)

Valuation Ratios
P/E Ratio 38
Price to Sales 7.9
Price to Book 5.8
Price to Tangible Book
Price to Cash Flow 21.3
Price to Free Cash Flow 25.7
Growth Rates
Sales Growth Rate 40.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 200%
Cap. Spend. - 3 Yr. Gr. Rate 27%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 34.8%
Total Debt to Equity 34.8%
Interest Coverage 8
Management Effectiveness
Return On Assets 11.5%
Ret/ On Assets - 3 Yr. Avg. 15.3%
Return On Total Capital 12.1%
Ret/ On T. Cap. - 3 Yr. Avg. 17.6%
Return On Equity 16.6%
Return On Equity - 3 Yr. Avg. 20.4%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 83.3%
Gross Margin - 3 Yr. Avg. 82.4%
EBITDA Margin 39.2%
EBITDA Margin - 3 Yr. Avg. 44.8%
Operating Margin 33.8%
Oper. Margin - 3 Yr. Avg. 39.6%
Pre-Tax Margin 27.4%
Pre-Tax Margin - 3 Yr. Avg. 36.9%
Net Profit Margin 20.7%
Net Profit Margin - 3 Yr. Avg. 29.5%
Effective Tax Rate 24.5%
Eff/ Tax Rate - 3 Yr. Avg. 20.6%
Payout Ratio 41.7%

JCOM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the JCOM stock intrinsic value calculation we used $1207 million for the last fiscal year's total revenue generated by j2 Global, Inc.. The default revenue input number comes from 0001 income statement of j2 Global, Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our JCOM stock valuation model: a) initial revenue growth rate of 9.4% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 5%, whose default value for JCOM is calculated based on our internal credit rating of j2 Global, Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of j2 Global, Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of JCOM stock the variable cost ratio is equal to 78%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for JCOM stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 6.2% for j2 Global, Inc..

Corporate tax rate of 27% is the nominal tax rate for j2 Global, Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the JCOM stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for JCOM are equal to 81.7%.

Life of production assets of 10.1 years is the average useful life of capital assets used in j2 Global, Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for JCOM is equal to -4.7%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1035.744 million for j2 Global, Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 48.780 million for j2 Global, Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of j2 Global, Inc. at the current share price and the inputted number of shares is $4.3 billion.

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