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The J2 Global (NASDAQ:JCOM) Share Price Is Up 17% And Shareholders Are Holding On

It hasn't been the best quarter for J2 Global, Inc. (NASDAQ:JCOM) shareholders, since the share price has fallen 10% in that time. But at least the stock is up over the last five years. In that time, it is up 17%, which isn't bad, but is below the market return of 52%.

Check out our latest analysis for J2 Global

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During five years of share price growth, J2 Global achieved compound earnings per share (EPS) growth of 8.7% per year. This EPS growth is higher than the 3.2% average annual increase in the share price. So it seems the market isn't so enthusiastic about the stock these days.

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You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

NasdaqGS:JCOM Past and Future Earnings May 27th 2020
NasdaqGS:JCOM Past and Future Earnings May 27th 2020

It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

What about the Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between J2 Global's total shareholder return (TSR) and its share price return. The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Its history of dividend payouts mean that J2 Global's TSR of 27% over the last 5 years is better than the share price return.

A Different Perspective

J2 Global shareholders are down 6.0% for the year, but the market itself is up 7.0%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. On the bright side, long term shareholders have made money, with a gain of 4.8% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 1 warning sign for J2 Global you should be aware of.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

Love or hate this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Thank you for reading.