Intrinsic value of Zayo Group Holdings - ZAYO

Previous Close

$33.73

  Intrinsic Value

$12.87

stock screener

  Rating & Target

str. sell

-62%

  Value-price divergence*

+1420%

Previous close

$33.73

 
Intrinsic value

$12.87

 
Up/down potential

-62%

 
Rating

str. sell

 
Value-price divergence*

+1420%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of ZAYO stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 8.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  27.84
  15.10
  14.09
  13.18
  12.36
  11.63
  10.96
  10.37
  9.83
  9.35
  8.91
  8.52
  8.17
  7.85
  7.57
  7.31
  7.08
  6.87
  6.68
  6.52
  6.36
  6.23
  6.11
  5.99
  5.90
  5.81
  5.73
  5.65
  5.59
  5.53
  5.48
Revenue, $m
  1,722
  1,982
  2,261
  2,559
  2,876
  3,210
  3,562
  3,931
  4,318
  4,721
  5,142
  5,581
  6,036
  6,510
  7,003
  7,515
  8,047
  8,600
  9,175
  9,773
  10,395
  11,042
  11,716
  12,419
  13,151
  13,914
  14,711
  15,542
  16,411
  17,318
  18,266
Variable operating expenses, $m
 
  1,266
  1,427
  1,599
  1,782
  1,975
  2,178
  2,392
  2,615
  2,848
  3,091
  3,222
  3,486
  3,759
  4,044
  4,340
  4,647
  4,966
  5,298
  5,643
  6,002
  6,376
  6,765
  7,171
  7,594
  8,035
  8,495
  8,975
  9,476
  10,000
  10,548
Fixed operating expenses, $m
 
  419
  430
  440
  451
  463
  474
  486
  498
  511
  524
  537
  550
  564
  578
  592
  607
  622
  638
  654
  670
  687
  704
  722
  740
  758
  777
  797
  817
  837
  858
Total operating expenses, $m
  1,515
  1,685
  1,857
  2,039
  2,233
  2,438
  2,652
  2,878
  3,113
  3,359
  3,615
  3,759
  4,036
  4,323
  4,622
  4,932
  5,254
  5,588
  5,936
  6,297
  6,672
  7,063
  7,469
  7,893
  8,334
  8,793
  9,272
  9,772
  10,293
  10,837
  11,406
Operating income, $m
  207
  297
  404
  520
  642
  772
  909
  1,054
  1,205
  1,363
  1,528
  1,821
  2,001
  2,187
  2,381
  2,583
  2,793
  3,012
  3,239
  3,476
  3,722
  3,979
  4,247
  4,526
  4,817
  5,121
  5,439
  5,771
  6,118
  6,481
  6,861
EBITDA, $m
  723
  890
  1,064
  1,250
  1,448
  1,658
  1,879
  2,111
  2,354
  2,608
  2,873
  3,149
  3,437
  3,736
  4,048
  4,371
  4,708
  5,058
  5,422
  5,801
  6,196
  6,607
  7,035
  7,481
  7,947
  8,432
  8,940
  9,469
  10,023
  10,602
  11,207
Interest expense (income), $m
  229
  240
  287
  339
  394
  452
  514
  579
  648
  719
  794
  872
  953
  1,037
  1,125
  1,216
  1,311
  1,409
  1,512
  1,618
  1,729
  1,844
  1,963
  2,088
  2,218
  2,354
  2,495
  2,642
  2,796
  2,957
  3,125
Earnings before tax, $m
  -68
  57
  117
  181
  248
  320
  395
  474
  557
  644
  734
  950
  1,048
  1,150
  1,256
  1,367
  1,482
  1,602
  1,727
  1,858
  1,994
  2,135
  2,283
  2,438
  2,599
  2,768
  2,944
  3,129
  3,322
  3,524
  3,736
Tax expense, $m
  8
  15
  32
  49
  67
  86
  107
  128
  150
  174
  198
  256
  283
  310
  339
  369
  400
  433
  466
  502
  538
  577
  616
  658
  702
  747
  795
  845
  897
  951
  1,009
Net income, $m
  -76
  42
  86
  132
  181
  233
  288
  346
  407
  470
  536
  693
  765
  839
  917
  998
  1,082
  1,170
  1,261
  1,356
  1,455
  1,559
  1,667
  1,779
  1,897
  2,020
  2,149
  2,284
  2,425
  2,573
  2,727

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  171
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  6,728
  7,536
  8,598
  9,731
  10,934
  12,206
  13,544
  14,948
  16,418
  17,952
  19,552
  21,219
  22,952
  24,754
  26,628
  28,574
  30,597
  32,700
  34,885
  37,159
  39,524
  41,985
  44,548
  47,219
  50,002
  52,905
  55,934
  59,096
  62,398
  65,847
  69,453
Adjusted assets (=assets-cash), $m
  6,557
  7,536
  8,598
  9,731
  10,934
  12,206
  13,544
  14,948
  16,418
  17,952
  19,552
  21,219
  22,952
  24,754
  26,628
  28,574
  30,597
  32,700
  34,885
  37,159
  39,524
  41,985
  44,548
  47,219
  50,002
  52,905
  55,934
  59,096
  62,398
  65,847
  69,453
Revenue / Adjusted assets
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
Average production assets, $m
  4,631
  5,330
  6,081
  6,882
  7,733
  8,632
  9,578
  10,571
  11,611
  12,696
  13,828
  15,006
  16,232
  17,506
  18,831
  20,208
  21,639
  23,125
  24,671
  26,279
  27,951
  29,692
  31,505
  33,393
  35,362
  37,415
  39,557
  41,793
  44,128
  46,568
  49,118
Working capital, $m
  -90
  -198
  -226
  -256
  -288
  -321
  -356
  -393
  -432
  -472
  -514
  -558
  -604
  -651
  -700
  -752
  -805
  -860
  -917
  -977
  -1,039
  -1,104
  -1,172
  -1,242
  -1,315
  -1,391
  -1,471
  -1,554
  -1,641
  -1,732
  -1,827
Total debt, $m
  4,136
  4,950
  5,841
  6,792
  7,801
  8,868
  9,990
  11,169
  12,401
  13,689
  15,032
  16,429
  17,884
  19,396
  20,968
  22,601
  24,298
  26,062
  27,896
  29,803
  31,787
  33,852
  36,003
  38,244
  40,579
  43,015
  45,556
  48,208
  50,979
  53,873
  56,898
Total liabilities, $m
  5,508
  6,323
  7,214
  8,165
  9,174
  10,241
  11,363
  12,542
  13,774
  15,062
  16,405
  17,802
  19,257
  20,769
  22,341
  23,974
  25,671
  27,435
  29,269
  31,176
  33,160
  35,225
  37,376
  39,617
  41,952
  44,388
  46,929
  49,581
  52,352
  55,246
  58,271
Total equity, $m
  1,219
  1,213
  1,384
  1,567
  1,760
  1,965
  2,181
  2,407
  2,643
  2,890
  3,148
  3,416
  3,695
  3,985
  4,287
  4,600
  4,926
  5,265
  5,617
  5,983
  6,363
  6,760
  7,172
  7,602
  8,050
  8,518
  9,005
  9,514
  10,046
  10,601
  11,182
Total liabilities and equity, $m
  6,727
  7,536
  8,598
  9,732
  10,934
  12,206
  13,544
  14,949
  16,417
  17,952
  19,553
  21,218
  22,952
  24,754
  26,628
  28,574
  30,597
  32,700
  34,886
  37,159
  39,523
  41,985
  44,548
  47,219
  50,002
  52,906
  55,934
  59,095
  62,398
  65,847
  69,453
Debt-to-equity ratio
  3.393
  4.080
  4.220
  4.330
  4.430
  4.510
  4.580
  4.640
  4.690
  4.740
  4.780
  4.810
  4.840
  4.870
  4.890
  4.910
  4.930
  4.950
  4.970
  4.980
  5.000
  5.010
  5.020
  5.030
  5.040
  5.050
  5.060
  5.070
  5.070
  5.080
  5.090
Adjusted equity ratio
  0.160
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -76
  42
  86
  132
  181
  233
  288
  346
  407
  470
  536
  693
  765
  839
  917
  998
  1,082
  1,170
  1,261
  1,356
  1,455
  1,559
  1,667
  1,779
  1,897
  2,020
  2,149
  2,284
  2,425
  2,573
  2,727
Depreciation, amort., depletion, $m
  516
  593
  660
  731
  806
  885
  969
  1,057
  1,149
  1,245
  1,345
  1,328
  1,436
  1,549
  1,666
  1,788
  1,915
  2,047
  2,183
  2,326
  2,474
  2,628
  2,788
  2,955
  3,129
  3,311
  3,501
  3,698
  3,905
  4,121
  4,347
Funds from operations, $m
  666
  635
  745
  862
  987
  1,119
  1,258
  1,403
  1,556
  1,715
  1,881
  2,021
  2,201
  2,389
  2,584
  2,786
  2,997
  3,216
  3,444
  3,682
  3,929
  4,186
  4,455
  4,735
  5,027
  5,331
  5,650
  5,982
  6,330
  6,694
  7,074
Change in working capital, $m
  -48
  -26
  -28
  -30
  -32
  -33
  -35
  -37
  -39
  -40
  -42
  -44
  -46
  -47
  -49
  -51
  -53
  -55
  -57
  -60
  -62
  -65
  -67
  -70
  -73
  -76
  -80
  -83
  -87
  -91
  -95
Cash from operations, $m
  714
  661
  773
  892
  1,019
  1,152
  1,293
  1,440
  1,594
  1,755
  1,923
  2,065
  2,247
  2,436
  2,633
  2,837
  3,050
  3,272
  3,502
  3,741
  3,991
  4,251
  4,522
  4,805
  5,100
  5,408
  5,729
  6,066
  6,417
  6,784
  7,169
Maintenance CAPEX, $m
  0
  -410
  -472
  -538
  -609
  -684
  -764
  -848
  -936
  -1,027
  -1,124
  -1,224
  -1,328
  -1,436
  -1,549
  -1,666
  -1,788
  -1,915
  -2,047
  -2,183
  -2,326
  -2,474
  -2,628
  -2,788
  -2,955
  -3,129
  -3,311
  -3,501
  -3,698
  -3,905
  -4,121
New CAPEX, $m
  -704
  -699
  -751
  -801
  -851
  -899
  -946
  -993
  -1,039
  -1,085
  -1,132
  -1,178
  -1,226
  -1,275
  -1,325
  -1,377
  -1,431
  -1,487
  -1,546
  -1,608
  -1,672
  -1,741
  -1,813
  -1,889
  -1,969
  -2,053
  -2,142
  -2,236
  -2,335
  -2,440
  -2,550
Cash from investing activities, $m
  -1,142
  -1,109
  -1,223
  -1,339
  -1,460
  -1,583
  -1,710
  -1,841
  -1,975
  -2,112
  -2,256
  -2,402
  -2,554
  -2,711
  -2,874
  -3,043
  -3,219
  -3,402
  -3,593
  -3,791
  -3,998
  -4,215
  -4,441
  -4,677
  -4,924
  -5,182
  -5,453
  -5,737
  -6,033
  -6,345
  -6,671
Free cash flow, $m
  -428
  -448
  -449
  -447
  -441
  -431
  -418
  -401
  -381
  -358
  -332
  -337
  -307
  -275
  -241
  -206
  -169
  -130
  -91
  -49
  -7
  37
  82
  128
  176
  225
  276
  329
  383
  440
  498
Issuance/(repayment) of debt, $m
  389
  820
  891
  951
  1,009
  1,067
  1,123
  1,178
  1,233
  1,288
  1,342
  1,398
  1,454
  1,512
  1,572
  1,633
  1,697
  1,764
  1,834
  1,907
  1,984
  2,065
  2,151
  2,241
  2,335
  2,436
  2,541
  2,653
  2,770
  2,894
  3,025
Issuance/(repurchase) of shares, $m
  -81
  118
  85
  51
  12
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  292
  938
  976
  1,002
  1,021
  1,067
  1,123
  1,178
  1,233
  1,288
  1,342
  1,398
  1,454
  1,512
  1,572
  1,633
  1,697
  1,764
  1,834
  1,907
  1,984
  2,065
  2,151
  2,241
  2,335
  2,436
  2,541
  2,653
  2,770
  2,894
  3,025
Total cash flow (excl. dividends), $m
  -138
  490
  527
  554
  581
  635
  705
  777
  852
  930
  1,010
  1,061
  1,147
  1,237
  1,331
  1,428
  1,529
  1,634
  1,743
  1,858
  1,977
  2,102
  2,232
  2,369
  2,512
  2,661
  2,818
  2,982
  3,154
  3,334
  3,523
Retained Cash Flow (-), $m
  -8
  -159
  -171
  -182
  -194
  -205
  -215
  -226
  -237
  -247
  -258
  -268
  -279
  -290
  -302
  -313
  -326
  -339
  -352
  -366
  -381
  -396
  -413
  -430
  -448
  -467
  -488
  -509
  -532
  -555
  -581
Prev. year cash balance distribution, $m
 
  165
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  496
  356
  372
  387
  431
  490
  551
  616
  683
  753
  793
  868
  947
  1,029
  1,114
  1,203
  1,295
  1,391
  1,492
  1,596
  1,706
  1,820
  1,939
  2,063
  2,194
  2,330
  2,473
  2,622
  2,778
  2,942
Discount rate, %
 
  10.30
  10.82
  11.36
  11.92
  12.52
  13.15
  13.80
  14.49
  15.22
  15.98
  16.78
  17.62
  18.50
  19.42
  20.39
  21.41
  22.48
  23.61
  24.79
  26.03
  27.33
  28.70
  30.13
  31.64
  33.22
  34.88
  36.62
  38.45
  40.38
  42.40
PV of cash for distribution, $m
 
  449
  290
  269
  247
  239
  233
  223
  209
  191
  171
  144
  124
  104
  86
  69
  54
  41
  31
  22
  16
  11
  7
  5
  3
  2
  1
  1
  0
  0
  0
Current shareholders' claim on cash, %
  100
  98.4
  97.4
  96.8
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7

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 five segments: Dark Fiber Solutions, Network Connectivity, Colocation and Cloud Infrastructure, Zayo Canada, and Other. The Dark 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 Network Connectivity segment offers bandwidth infrastructure solutions comprising wavelength, Ethernet, Internet protocol, and SONET services through its metro, regional, and long-haul fiber networks for carriers, financial services companies, healthcare, government institutions, education institutions, and other enterprises. The Colocation and Cloud Infrastructure segment provides data center infrastructure solutions, including colocation, interconnection, cloud, hosting, and managed services to a range of enterprise, carrier, content, and cloud customers. The Zayo Canada segment offers dark fiber, network connectivity, cloud and colocation infrastructure, voice, unified communications, and managed security services for small and medium business customers. The Other segment provides network and technical resources to customers in designing, acquiring, and maintaining their networks. The company was founded in 2007 and is headquartered in Boulder, Colorado.

FINANCIAL RATIOS  of  Zayo Group Holdings (ZAYO)

Valuation Ratios
P/E Ratio -107.7
Price to Sales 4.8
Price to Book 6.7
Price to Tangible Book
Price to Cash Flow 11.5
Price to Free Cash Flow 818.5
Growth Rates
Sales Growth Rate 27.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 32.8%
Cap. Spend. - 3 Yr. Gr. Rate 16.2%
Financial Strength
Quick Ratio 29
Current Ratio 0
LT Debt to Equity 338.8%
Total Debt to Equity 339.3%
Interest Coverage 1
Management Effectiveness
Return On Assets 2.8%
Ret/ On Assets - 3 Yr. Avg. 1.4%
Return On Total Capital -1.5%
Ret/ On T. Cap. - 3 Yr. Avg. -3.4%
Return On Equity -6.3%
Return On Equity - 3 Yr. Avg. -20.1%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 66.4%
Gross Margin - 3 Yr. Avg. 68.4%
EBITDA Margin 39.3%
EBITDA Margin - 3 Yr. Avg. 34.8%
Operating Margin 12%
Oper. Margin - 3 Yr. Avg. 7.5%
Pre-Tax Margin -3.9%
Pre-Tax Margin - 3 Yr. Avg. -9.6%
Net Profit Margin -4.4%
Net Profit Margin - 3 Yr. Avg. -10.6%
Effective Tax Rate -11.8%
Eff/ Tax Rate - 3 Yr. Avg. -10.9%
Payout Ratio 0%

ZAYO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ZAYO stock intrinsic value calculation we used $1722 million for the last fiscal year's total revenue generated by Zayo Group Holdings. The default revenue input number comes from 2016 income statement of Zayo Group Holdings. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our ZAYO stock valuation model: a) initial revenue growth rate of 15.1% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 10.3%, whose default value for ZAYO is calculated based on our internal credit rating of Zayo Group Holdings, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Zayo Group Holdings.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of ZAYO stock the variable cost ratio is equal to 64.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $409 million in the base year in the intrinsic value calculation for ZAYO stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.8% for Zayo Group Holdings.

Corporate tax rate of 27% is the nominal tax rate for Zayo Group Holdings. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the ZAYO stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for ZAYO are equal to 268.9%.

Life of production assets of 11.3 years is the average useful life of capital assets used in Zayo Group Holdings operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for ZAYO is equal to -10%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1219 million for Zayo Group Holdings - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 244.165 million for Zayo Group Holdings is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Zayo Group Holdings at the current share price and the inputted number of shares is $8.2 billion.

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COMPANY NEWS

▶ Zayo Group Reports Bookings Success   [12:14PM  Motley Fool]
▶ Zayo Group meets 4Q profit forecasts   [Aug-21-17 10:01PM  Associated Press]
▶ Consolidated Smart Systems Selects Zayo for Dark Fiber   [Aug-10-17 08:00AM  Business Wire]
▶ Zayo to Enable CloudLink Service in Peak 10 Data Centers   [Jul-31-17 08:00AM  Business Wire]
▶ Cloud Service Provider Selects Zayo for Diverse Wavelengths   [Jul-27-17 08:00AM  Business Wire]
▶ Zayo Group Announces Completion of Term Loan Repricing   [Jul-20-17 04:05PM  Business Wire]
▶ Zayo Group, LLC Closes $300M Senior Notes Offering   [Jul-05-17 04:05PM  Business Wire]
▶ Zayo Group, LLC Prices $300 Million Senior Notes Offering   [Jun-29-17 04:07PM  Business Wire]
▶ Zayo Group Announces Change in Sales Leadership   [Jun-22-17 08:42AM  Business Wire]
▶ Large Data Center Provider Selects Zayo for Dark Fiber   [Jun-16-17 09:21AM  Business Wire]
▶ Multinational Bank Selects Zayo for Dark Fiber   [Jun-08-17 08:00AM  Business Wire]
▶ Zayo Executives to Present at June Investor Conferences   [Jun-05-17 05:00PM  Business Wire]
▶ Eagle Brook Church Selects Zayo for Dark Fiber   [May-24-17 08:00AM  Business Wire]
▶ Zayo Executives to Present at May Investor Conferences   [May-15-17 04:05PM  Business Wire]
▶ IPO Stock News And Analysis: Find Today's Top New Issues   [10:30AM  Investor's Business Daily]
▶ Zayo Falls On Weak Revenue, 'Dark Fiber' Bookings; M&A Doubted   [04:53PM  Investor's Business Daily]
▶ Zayo Group beats 3Q profit forecasts   [May-09-17 05:40PM  Associated Press]
▶ Zayo Acquires Two Southern California Data Centers   [May-04-17 08:00AM  Business Wire]
▶ Qorvo Drops 8%, Regains Ground Amidst China Woes   [May-03-17 04:36PM  Barrons.com]
▶ Zayo Achieves MEF Carrier Ethernet 2.0 Certification   [Apr-27-17 08:00AM  Business Wire]
▶ Stocks, Dow Industrials Up, Oil Off; Zayo Breaks Out; Will Snap Hit New Low?   [Apr-17-17 04:59PM  Investor's Business Daily]
▶ Zayo Expands Los Angeles Data Center Presence   [Apr-13-17 08:00AM  Business Wire]
▶ Stocks To Buy And Watch: Top IPOs, Big And Small Caps, Growth Stocks   [Apr-07-17 03:47PM  Investor's Business Daily]
▶ Andrew Crouch Joins Zayo Group as President and COO   [Apr-04-17 04:05PM  Business Wire]
▶ Multinational Retailer Selects Zayo for Global WAN Solution   [Mar-24-17 10:47AM  Business Wire]
▶ IaaS Provider Selects Zayo for Multi-product Solution   [Mar-16-17 10:00AM  Business Wire]
▶ Zayo Selected by Wireless Carrier for Small Cell Solution   [Mar-08-17 08:00AM  Business Wire]
▶ Zayo Expands Data Center Presence in Paris   [08:00AM  Business Wire]
▶ Webscale Cloud Provider Selects Zayo for Metro Dark Fiber   [Feb-21-17 10:00AM  Business Wire]
▶ Zayo Announces New Dark Fiber Route   [11:13AM  Business Wire]
▶ Zayo Helps Fans Stay Connected at Super Bowl 51   [Feb-07-17 10:00AM  Business Wire]
Financial statements of ZAYO
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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