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Zayo (ZAYO) to Report Q2 Earnings: What's in the Offing?

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·4 min read
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Zayo Group Holdings, Inc. ZAYO is scheduled to report second-quarter fiscal 2020 results on Feb 4, after the closing bell. In the last reported quarter, the company delivered a negative earnings surprise of 55.6%. Zayo missed the Zacks Consensus Estimate for earnings thrice in the trailing four quarters, the negative surprise being 3.1%, on average.

The fiber optic bandwidth infrastructure company is expected to have recorded slightly higher aggregate revenues on a year-over-year basis. The performance can be attributed to its multi-site data center portfolio, ability to customize solutions, and competence to connect globally over its network.

The company continues to leverage its dense fiber assets in almost all North American and Western European metro markets to deliver a premier metro wavelength offering.  Zayo’s extensive wavelength network provides bandwidth to major data centers, carrier hotels, cable landing stations and enterprise locations across its long-haul and metro networks.

Let’s find out how things have shaped up prior to the announcement.

Zayo has enhanced its Channel Partner Program, including naming new Channel Sales leadership, tripling of its Channel Program resources, providing dedicated partner support, simplifying its business partner agreement and improving residual payments.

During the quarter under review, Zayo was selected by Mid-Atlantic Crossroads (MAX) to provide data center colocation in zColo’s Ashburn facility. MAX is a center at the University of Maryland that manages a multi-state advanced cyberinfrastructure platform. The development is likely to have translated into top-line growth.

For the December quarter, the Zacks Consensus Estimate for total revenues stands at $648 million, implying an increase of 1.4% from the year-ago quarter’s reported figure. Consequently, adjusted earnings per share are pegged at 18 cents, indicating a rise of 38.5% from the prior-year quarter’s reported figure.

What Our Model Says

Our proven model doesn’t conclusively predict an earnings beat for Zayo this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Zayo’s Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00% as both are pegged at 18 cents.

Zayo Group Holdings, Inc. Price and EPS Surprise

Zayo Group Holdings, Inc. Price and EPS Surprise
Zayo Group Holdings, Inc. Price and EPS Surprise

Zayo Group Holdings, Inc. price-eps-surprise | Zayo Group Holdings, Inc. Quote

Zacks Rank: Zayo currently has a Zacks Rank #3.

Stocks to Consider

Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Microchip Technology Incorporated MCHP is slated to release quarterly results on Feb 4. It has an Earnings ESP of +1.33% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Royal Gold, Inc. RGLD is scheduled to release results on Feb 5. The company has an Earnings ESP of +0.78% and sports a Zacks Rank #1.  

NGL Energy Partners LP NGL has an Earnings ESP of +36.84% and has a Zacks Rank of 1. The company is set to report results on Feb 6.

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