Contrasting Zayo Group (ZAYO) and Consolidated Communications (CNSL)

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Zayo Group (NASDAQ: CNSL) and Consolidated Communications (NASDAQ:CNSL) are both computer and technology companies, but which is the superior stock? We will compare the two companies based on the strength of their risk, earnings, analyst recommendations, institutional ownership, valuation, dividends and profitability.

Earnings and Valuation

This table compares Zayo Group and Consolidated Communications’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Zayo Group $2.60 billion 3.26 $101.90 million $0.61 56.39
Consolidated Communications $1.06 billion 0.79 $64.94 million $0.26 45.12

Zayo Group has higher revenue and earnings than Consolidated Communications. Consolidated Communications is trading at a lower price-to-earnings ratio than Zayo Group, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

93.9% of Zayo Group shares are held by institutional investors. Comparatively, 70.6% of Consolidated Communications shares are held by institutional investors. 5.2% of Zayo Group shares are held by insiders. Comparatively, 2.4% of Consolidated Communications shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Consolidated Communications pays an annual dividend of $1.55 per share and has a dividend yield of 13.2%. Zayo Group does not pay a dividend. Consolidated Communications pays out 596.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Ratings

This is a summary of current ratings and price targets for Zayo Group and Consolidated Communications, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Zayo Group 0 2 14 0 2.88
Consolidated Communications 0 3 1 0 2.25

Zayo Group presently has a consensus target price of $43.00, indicating a potential upside of 25.00%. Consolidated Communications has a consensus target price of $14.67, indicating a potential upside of 25.04%. Given Consolidated Communications’ higher probable upside, analysts clearly believe Consolidated Communications is more favorable than Zayo Group.

Risk and Volatility

Zayo Group has a beta of 0.43, meaning that its share price is 57% less volatile than the S&P 500. Comparatively, Consolidated Communications has a beta of 0.72, meaning that its share price is 28% less volatile than the S&P 500.

Profitability

This table compares Zayo Group and Consolidated Communications’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Zayo Group 3.91% 9.97% 1.65%
Consolidated Communications 3.47% -3.15% -0.45%

Summary

Zayo Group beats Consolidated Communications on 13 of the 16 factors compared between the two stocks.

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.

About Consolidated Communications

Consolidated Communications Holdings, Inc., through its subsidiaries, provides various integrated communications services to business and residential customers in the United States. It offers a range of communication services and products that include local and long-distance, high-speed broadband Internet access, video, voice over Internet protocol, private line, custom calling features, security, cloud, data center, managed and IT, and directory publishing services, as well as engages in equipment sales activities. The company also sells and supports telecommunications equipment, such as key, private branch exchange, IP-based telephone systems, and other hardware solutions, as well as offers support services to medium and large business customers. As of December 31, 2017, it had approximately 972 thousand voice connections, 784 thousand data connections, and 103 thousand video connections. The company serves customers in consumer, commercial, and carrier channels. Consolidated Communications Holdings, Inc. was founded in 1894 and is headquartered in Mattoon, Illinois.

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