Zayo Group Holdings, Inc. ZAYO recently augmented Internet connectivity of Denver Public Schools (“DPS”) by developing an extensive network of high-capacity fiber across the district. Spanning more than 600 route miles, the dark fiber network will connect 132 schools in the region with a highly reliable and cost-effective bandwidth solution.
The network is expected to improve the bandwidth of each school location by approximately 500%, equipping the educational institutions with digital resources such as, electronic textbooks, online standardized testing, streaming media and cloud-based applications. The dedicated connection eliminates the chance of network congestion for other data-intensive operations for the district, like video surveillance and other security initiatives.
In addition, the network architecture includes multiple rings in each of the district data center to minimize network interruptions for round-the-clock connectivity. Moreover, the long-term lease agreement will help DPS to save operating costs for similar Internet connection from third-party service providers.
Consequently, the network offers an optimal solution for greater capacity, control, security and scalability at a low cost of ownership. This, in turn, is likely to be highly beneficial for the overall student community and teachers.
Zayo is poised to benefit from a diversified blue-chip customer base that comprises the largest and most sophisticated users of bandwidth. The company aims to grow the network business at 5% and beyond while controlling expenses to boost OpEx efficiency. Zayo emphasizes on less than 12-month payback deals while opting for strategic investments like e-rate deals, mobile infrastructure and long-haul fiber. Such deals leverage its existing assets in conjunction with new builds. These are likely to deliver strong free cash flow yields and attractive returns on invested capital.
Markedly, Zayo’s multi-site data center portfolio, ability to customize its solutions and capability to connect globally over its network are key growth drivers. The company continues enhancing 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 should drive its top line.
Management is bullish about the prospects of its largest business segment, Fiber Solutions, as it is witnessing a very strong deal momentum. Over the past year, the Zacks Rank #3 (Hold) stock has outperformed the industry with an average return of 34.9% compared with 12.5% rise of the latter.
Better-ranked stocks in the broader industry include America Movil, S.A.B. de C.V. AMX, PLDT Inc. PHI and BlackBerry Limited BB, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
America Movil has a long-term earnings growth expectation of 17.2%.
PLDT is currently trading at a forward P/E of 8.9x.
BlackBerry delivered positive earnings surprise of 68.8%, on average, in the trailing four quarters beating estimates thrice.
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