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Manning & Napier Almost Doubles Stake in Zayo Group Holdings

- By Kyle Ferguson

Manning & Napier Advisors Inc. nearly doubled its stake in the Zayo Group Holdings Inc. (ZAYO) adding 2,569,425 shares of the company during the first quarter.

The shares were purchased for an average price of $31.03 per share.

Manning & Napier now owns 5,504,715 shares of Zayo Group.


Zayo Group Holdings has a market cap of $8.35 billion, an enterprise value of $12.38 billion, a price-book (P/B) ratio of 6.49, a price-sales (P/S) ratio of 4.19 and a quick ratio of 0.79.

Zayo Group Holdings provides communications infrastructure services including fiber and bandwidth connectivity, colocation and cloud infrastructure to a range of businesses.

The company operates in five segments: Dark Fiber Solutions, Network Connectivity, Colocation and Cloud Infrastructure, Zayo Canada and Other. Its products include leased dark fiber, fiber to cellular towers and small cell sites, wavelength connections, Ethernet, Internet Protocol (IP) connectivity and cloud services. Its products and services enable high-bandwidth applications, such as cloud-based computing, video, mobile, social media and machine-to-machine connectivity.

As of March 1 the company operated 8,100 route miles of long haul fiber and 4,000 miles of dense metro fiber across Denver, Minneapolis, Phoenix, Portland, Oregon, Seattle, Sacramento, California, San Francisco, San Jose, California, Salt Lake City, Spokane, Washington, and Boise, Idaho, with on-net connectivity to over 3,100 enterprise buildings and 100 data centers.

The company recently announced it is going to significantly expand its Los Angeles data center presence with a new location at One Wilshire Building, 624 South Grand Avenue. The facility will add 24,215 total square feet and two megawatts (MW) of critical power and is the company's fifth data center in California. The expansion is driven by strong customer demand in Los Angeles, including a new agreement with a major webscale company as an anchor tenant in the space.

Full details can be read by clicking here.

According to GuruFocus, the company has a 4 of 10 financial strength rating with a cash-debt ratio of 0.03 and an equity-asset ratio of 0.19. Its Altman Z-Score of 1.13 indicates it is facing some sort of financial distress and could potentially file for bankruptcy within the next two years. The company's Beneish M-Score of -2.11 indicates it is a manipulator of its financial statements.

The company has an 8 of 10 profitability and growth rating. It has an operating margin of 15.38%, a net margin of -0.74%, a return on assets (ROA) of -0.22% and a return on capital (ROC) of 5.17%.

Over the previous five years Zayo Group Holdings has averaged increases in revenue (71.70%), net income (133.99%), earnings per share (1,203.14%), capital spending (75.82%) and gross margin (77.18%).

Since Manning and Napier added to its stake in Zayo Group Holdings, the company's market price has gained an estimated 7%.

Below is a Peter Lynch chart that shows the company is trading above its intrinsic value.

Disclosure: Author does not own any shares of this company.

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This article first appeared on GuruFocus.