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Aggressive Growth

Dycom Industries (DY - Analyst Report) has topped forecasts in each of the past 3 quarters and shares look to be on the verge of a breakout.

Company Description

Dycom primarily offers specialty contracting services for telecommunications providers in the U.S including engineering, construction, and maintenance. The company serves electric and gas utilities as well.

Third Consecutive Surprise

On Nov 21 Dycom reported first-quarter results for fiscal 2012 and saw contract revenues grow 16.6%, to $319.6 million from $261.6 million. That led to net income of $13.0 million, about double the $6.7 million a year ago.

There was not much else in the press release, but earnings per share came in at $0.38, 8 cents higher than the Zacks consensus Estimate. Dycom has now topped forecasts for 3 straight quarters.

Estimates Jump

After the surprise, analysts unanimously raised forecasts. The full-year Zacks Consensus Estimate for fiscal 2012 is up 12 cents, to $1.04.

Next year's average projection is up 6 cents, to $1.33. During fiscal 2011 the company made $0.61 per share, so the growth rates are at 70% and 28%, respectively.

Valuations

Shares of DY are going for just under 20 times this year's estimates. With an 11% long-term growth rate the PEG comes in at 1.8 times. Not exactly a value, but if estimates continue to rise the growth should trump the valuations.

Other metrics look a bit better though. The price to sales is about 0.6 and the stock is going for 1.9 times book value.

The Chart

DY was trending higher before hitting this resistence level. Some market enthusiasm from Friday's EU summit could be the catalyst to spark a rally and a breakout for DY investors.

Dycom Industries - ticker DY>
 
 
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Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Small Cap Trader service

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