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Zayo Group Holdings, Inc. (NYSE:ZAYO): Immense Growth Potential?

Looking at Zayo Group Holdings, Inc.’s (NYSE:ZAYO) earnings update in September 2018, analysts seem fairly confident, as a 37% increase in profits is expected in the upcoming year, though this is evidently lower than the historical 5-year average earnings growth of 74%. By 2019, we can expect Zayo Group Holdings’s bottom line to reach US$140m, a jump from the current trailing-twelve-month US$102m. Below is a brief commentary around Zayo Group Holdings’s earnings outlook going forward, which may give you a sense of market sentiment for the company. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

Check out our latest analysis for Zayo Group Holdings

How will Zayo Group Holdings perform in the near future?

Over the next three years, it seems the consensus view of the 16 analysts covering ZAYO is skewed towards the positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To get an idea of the overall earnings growth trend for ZAYO, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.

NYSE:ZAYO Future Profit December 14th 18

From the current net income level of US$102m and the final forecast of US$198m by 2021, the annual rate of growth for ZAYO’s earnings is 17%. EPS reaches $0.80 in the final year of forecast compared to the current $0.41 EPS today. In 2021, ZAYO’s profit margin will have expanded from 3.9% to 7.3%.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Zayo Group Holdings, I’ve compiled three key aspects you should look at:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Zayo Group Holdings worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Zayo Group Holdings is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Zayo Group Holdings? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.