Critical Review: Zayo Group (ZAYO) vs. Its Peers

Zayo Group (NYSE: ZAYO) is one of 73 publicly-traded companies in the “Telephone communication, except radio” industry, but how does it compare to its peers? We will compare Zayo Group to similar companies based on the strength of its dividends, valuation, profitability, institutional ownership, risk, analyst recommendations and earnings.

Insider and Institutional Ownership

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87.3% of Zayo Group shares are owned by institutional investors. Comparatively, 47.1% of shares of all “Telephone communication, except radio” companies are owned by institutional investors. 5.2% of Zayo Group shares are owned by insiders. Comparatively, 7.3% of shares of all “Telephone communication, except radio” companies 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.

Profitability

This table compares Zayo Group and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Zayo Group 3.42% 10.19% 1.67%
Zayo Group Competitors -12.86% -11.71% -1.52%

Volatility & Risk

Zayo Group has a beta of 0.53, suggesting that its stock price is 47% less volatile than the S&P 500. Comparatively, Zayo Group’s peers have a beta of 0.59, suggesting that their average stock price is 41% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations for Zayo Group and its peers, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Zayo Group 0 6 10 0 2.63
Zayo Group Competitors 603 1852 1935 97 2.34

Zayo Group currently has a consensus target price of $41.78, suggesting a potential upside of 15.15%. As a group, “Telephone communication, except radio” companies have a potential upside of 71.42%. Given Zayo Group’s peers higher probable upside, analysts clearly believe Zayo Group has less favorable growth aspects than its peers.

Earnings & Valuation

This table compares Zayo Group and its peers gross revenue, earnings per share and valuation.

Gross Revenue Net Income Price/Earnings Ratio
Zayo Group $2.20 billion $85.70 million 90.70
Zayo Group Competitors $17.39 billion $2.01 billion 17.98

Zayo Group’s peers have higher revenue and earnings than Zayo Group. Zayo Group is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Summary

Zayo Group beats its peers on 7 of the 13 factors compared.

About Zayo Group

Zayo Group Holdings, Inc., through its subsidiaries, provides bandwidth infrastructure solutions for the communications industry in the United States, Canada, and Europe. The company operates in six segments: Fiber Solutions, Transport, Enterprise Networks, Zayo Colocation (zColo), Allstream, and Other. The Fiber Solutions segment provides dark fiber, and fiber-to-the-tower and small cell mobile infrastructure services for carriers and other communication service providers, Internet service providers, wireless service providers, media and content companies, large enterprises, and other companies. The Transport segment offers lit bandwidth infrastructure solutions comprising wavelength, wholesale IP services, and SONET services through its metro, regional, and long-haul fiber networks for carriers, content providers, financial services companies, healthcare, government entities, education institutions, and other medium and large enterprises. The Enterprise Networks segment provides communication solutions, such as Ethernet, enterprise private and connectivity services, managed services, and cloud based compute and storage products to medium and large enterprises. The Zayo Colocation (zColo) segment offers data center infrastructure solutions, including colocation space, and power and interconnection services to a range of enterprise, carrier, cloud, and content customers. The Allstream segment provides Internet protocol (IP), Internet, voice, IP trunking, cloud private branch exchange, and collaboration services, as well as unified communications for small and medium business customers. The Other segment provides network and technical resources to customers in designing, acquiring, and maintaining their networks. Zayo Group Holdings, Inc. was founded in 2007 and is headquartered in Boulder, Colorado.

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