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High Fiber Solutions Revenues to Aid Zayo (ZAYO) Q4 Earnings
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Zayo Group Holdings, Inc. is scheduled to report fourth-quarter fiscal 2018 results after the closing bell on Aug 22. In the last reported quarter, the company delivered a negative earnings surprise of 18.2%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
During the fiscal fourth quarter, Zayo acquired a data center in McLean, VA. The buyout which includes tenants, data center systems and long-term leases was primarily driven by healthy demand in the Washington, D.C. area for low-latency colocation, interconnection and access to fiber infrastructure.
Moreover, TierPoint, a provider of secure, connected data center and cloud solutions, partnered with Zayo to offer the latter’s CloudLink solutions. CloudLink provides high-performance bandwidth options, enabling secure connectivity directly to the world's largest public cloud providers.
During the quarter, Zayo also completed the acquisition of substantially all of the assets of Neutral Path Communications and Near North Partners. The buyout added 452 owned route miles with additional leased route miles to the company’s North American network, including a high-count fiber route from Minneapolis to Omaha. The fiber footprint provided Zayo with three owned diverse fiber routes out of Minneapolis, Chicago and Omaha. In addition, the company completed a coherent wavelength route from Marseille to Strasbourg through Milan. The route, which provides connectivity to Paris, Frankfurt, London and Amsterdam, augmented Zayo’s European fiber network acquired from Viatel.
The strategic acquisitions augmented the operational capacity of the company in order to meet the surging demands. These in turn are likely to yield higher revenues for the company in the quarter.
Top-Line Expansion
The Zacks Consensus Estimate for revenues from the Fiber Solutions segment, which accounts for the lion’s share of total revenues, is currently pegged at $211 million, up from $191 million reported a year ago. For the fiscal fourth quarter, revenues from Enterprise Networks are expected to be $140 million compared with $137 million reported in the year-ago quarter. Revenues from Transport are estimated to be $118 million compared with $117 million reported a year ago.
While revenues from the Allstream segment are expected to fall to $114 million from $129 million, revenues from Zayo Colocation are expected to be $66 million compared with $57 million reported in the year-ago quarter. Consequently, for the fiscal fourth quarter, the Zacks Consensus Estimate for total revenues stands at $657 million, up from $638 million reported in the year-earlier quarter.
Operating Details
Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) from Fiber Solutions is expected to increase to $161 million from $150 million reported a year ago. The same from Enterprise Networks is expected to be $49.6 million compared with $51 million. EBITDA from Transport is expected to be $47.7 million compared with $49.3 million.
While EBITDA from Allstream is expected to be $24.4 million, down from $30 million, Zayo Colocation is expected to slightly improve to $29.7 million from $29.3 million reported in the year-ago quarter.
What Our Model Says
Our proven model does not conclusively show that Zayo is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is exactly not the case here as you will see below:
Earnings ESP: Zayo has an Earnings ESP of +10.42%, as the Most Accurate Estimate is pegged at 10 cents and the Zacks Consensus Estimate is 9 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Zayo currently has a Zacks Rank #4 (Sell).
We caution against all Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Foot Locker, Inc. (FL - Free Report) has an Earnings ESP of +3.55% and a Zacks Rank #2.
Big Lots, Inc. (BIG - Free Report) has an Earnings ESP of +4.48% and a Zacks Rank #2.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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High Fiber Solutions Revenues to Aid Zayo (ZAYO) Q4 Earnings
Zayo Group Holdings, Inc. is scheduled to report fourth-quarter fiscal 2018 results after the closing bell on Aug 22. In the last reported quarter, the company delivered a negative earnings surprise of 18.2%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
During the fiscal fourth quarter, Zayo acquired a data center in McLean, VA. The buyout which includes tenants, data center systems and long-term leases was primarily driven by healthy demand in the Washington, D.C. area for low-latency colocation, interconnection and access to fiber infrastructure.
Moreover, TierPoint, a provider of secure, connected data center and cloud solutions, partnered with Zayo to offer the latter’s CloudLink solutions. CloudLink provides high-performance bandwidth options, enabling secure connectivity directly to the world's largest public cloud providers.
During the quarter, Zayo also completed the acquisition of substantially all of the assets of Neutral Path Communications and Near North Partners. The buyout added 452 owned route miles with additional leased route miles to the company’s North American network, including a high-count fiber route from Minneapolis to Omaha. The fiber footprint provided Zayo with three owned diverse fiber routes out of Minneapolis, Chicago and Omaha. In addition, the company completed a coherent wavelength route from Marseille to Strasbourg through Milan. The route, which provides connectivity to Paris, Frankfurt, London and Amsterdam, augmented Zayo’s European fiber network acquired from Viatel.
The strategic acquisitions augmented the operational capacity of the company in order to meet the surging demands. These in turn are likely to yield higher revenues for the company in the quarter.
Top-Line Expansion
The Zacks Consensus Estimate for revenues from the Fiber Solutions segment, which accounts for the lion’s share of total revenues, is currently pegged at $211 million, up from $191 million reported a year ago. For the fiscal fourth quarter, revenues from Enterprise Networks are expected to be $140 million compared with $137 million reported in the year-ago quarter. Revenues from Transport are estimated to be $118 million compared with $117 million reported a year ago.
While revenues from the Allstream segment are expected to fall to $114 million from $129 million, revenues from Zayo Colocation are expected to be $66 million compared with $57 million reported in the year-ago quarter. Consequently, for the fiscal fourth quarter, the Zacks Consensus Estimate for total revenues stands at $657 million, up from $638 million reported in the year-earlier quarter.
Operating Details
Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) from Fiber Solutions is expected to increase to $161 million from $150 million reported a year ago. The same from Enterprise Networks is expected to be $49.6 million compared with $51 million. EBITDA from Transport is expected to be $47.7 million compared with $49.3 million.
While EBITDA from Allstream is expected to be $24.4 million, down from $30 million, Zayo Colocation is expected to slightly improve to $29.7 million from $29.3 million reported in the year-ago quarter.
What Our Model Says
Our proven model does not conclusively show that Zayo is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is exactly not the case here as you will see below:
Earnings ESP: Zayo has an Earnings ESP of +10.42%, as the Most Accurate Estimate is pegged at 10 cents and the Zacks Consensus Estimate is 9 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zayo Group Holdings, Inc. Price and EPS Surprise
Zayo Group Holdings, Inc. Price and EPS Surprise | Zayo Group Holdings, Inc. Quote
Zacks Rank: Zayo currently has a Zacks Rank #4 (Sell).
We caution against all Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
RedHill Biopharma Ltd. (RDHL - Free Report) has an Earnings ESP of +3.19% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Foot Locker, Inc. (FL - Free Report) has an Earnings ESP of +3.55% and a Zacks Rank #2.
Big Lots, Inc. (BIG - Free Report) has an Earnings ESP of +4.48% and a Zacks Rank #2.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>