j2 Global (NASDAQ: JCOM) and Shaw Communications (NYSE:SJR) are both mid-cap integrated telecommunications services – nec companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, earnings, analyst recommendations, valuation, profitability, dividends and institutional ownership.

Dividends

j2 Global pays an annual dividend of $1.54 per share and has a dividend yield of 2.1%. Shaw Communications pays an annual dividend of $0.92 per share and has a dividend yield of 4.2%. j2 Global pays out 57.0% of its earnings in the form of a dividend. Shaw Communications pays out 69.2% 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.

Risk & Volatility

j2 Global has a beta of 0.88, indicating that its stock price is 12% less volatile than the S&P 500. Comparatively, Shaw Communications has a beta of 0.97, indicating that its stock price is 3% less volatile than the S&P 500.

Earnings and Valuation

This table compares j2 Global and Shaw Communications’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
j2 Global $874.26 million 4.06 $152.43 million $2.70 27.17
Shaw Communications $3.70 billion 2.82 $644.63 million $1.33 16.56

Shaw Communications has higher revenue and earnings than j2 Global. Shaw 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.

Analyst Ratings

This is a summary of current ratings for j2 Global and Shaw 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
Shaw Communications 1 4 1 0 2.00

j2 Global currently has a consensus price target of $101.75, suggesting a potential upside of 38.70%. Shaw Communications has a consensus price target of $27.20, suggesting a potential upside of 23.52%. Given j2 Global’s stronger consensus rating and higher possible upside, equities research analysts clearly believe j2 Global is more favorable than Shaw Communications.

Profitability

This table compares j2 Global and Shaw 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%
Shaw Communications 16.80% 9.54% 3.69%

Insider and Institutional Ownership

51.2% of Shaw Communications shares are owned by institutional investors. 5.2% of j2 Global shares are owned by insiders. Comparatively, 1.0% of Shaw Communications shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Summary

j2 Global beats Shaw Communications on 9 of the 16 factors compared between the two stocks.

About j2 Global

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‚Äôs 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.

About Shaw Communications

Shaw Communications Inc. (Shaw) is a diversified connectivity provider. The Company operates through four divisions: Consumer, Wireless, Business Network Services and Business Infrastructure Services. Under the Consumer division, the Company offers Cable telecommunications and Satellite video services to residential customers. Its Business Network Services division offers data networking, Cable telecommunications, Satellite video and fleet tracking services to businesses and public sector entities. Its Business Infrastructure Services division offers data center colocation, cloud technology and managed information technology (IT) solutions to businesses. The Company offers wireless services for voice and data communications through its Wireless division. Its wireline services offer approximately 120 high definition (HD) channels and over 10,000 on-demand, pay-per-view and subscription movie and television programming titles.

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