Zayo Group Holdings, Inc. (ZAYO - Free Report) recently inked an agreement with an unnamed Mexican carrier for an undisclosed amount to offer an IP solution to support key cities across the Latin American country. The deal will help the carrier better connect with the content providers in the United States.
The IP solution will offer the Mexican telecom provider a seamless interconnection with U.S.-based content, gaming and webscale companies via Zayo’s data center in Dallas. This would unearth an opportunity to deliver in-demand content to regional consumers. The strategic deal would therefore enable the carrier to strengthen its presence in the market, while providing a steady revenue stream to Zayo.
Zayo’s extensive network footprint, diversified product portfolio and the ability to penetrate in different markets are commendable. The company continues to extend global reach by expanding its fiber footprint and forging partnerships with local providers. It has been experiencing broad-based demand across all customer verticals, which is likely to continue.
Meanwhile, improving trends such as record bookings and stable churn are expected to drive organic growth. Zayo is bullish about additional E-Rate opportunities in the upcoming quarters and is well poised to benefit from the growing need for cloud adoption and high-performance bandwidth across the globe.
Furthermore, Zayo is quite enthusiastic about the prospects of its largest business segment — Fiber Solutions. Moreover, it has been realigning its businesses to drive efficiency and improve operating metrics. Notably, the company is moving its Ethernet Transport business from Enterprise to the Transport segment. The realignment is expected to arrange all point-to-point private network solutions within one segment — Transport.
With diligent execution of operational plans, Zayo has gained 2.2% on an average in the past year while the industry declined 0.6%.
Zayo currently has a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader industry are United States Cellular Corp. (USM - Free Report) , CenturyLink, Inc. (CTL - Free Report) and Telenav, Inc. (TNAV - Free Report) . While United States Cellular sports a Zacks Rank #1 (Strong Buy), CenturyLink and Telenav carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
United States Cellular has long-term earnings growth expectation of 1%. It surpassed earnings estimates in each of the trailing four quarters, the average positive surprise being 340.4%.
CenturyLink has trumped earnings estimates twice in the trailing four quarters, the average positive surprise being 13.7%.
Telenav surpassed earnings estimates in each of the trailing four quarters, the average positive surprise being 3.7%.
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