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Dycom (DY) Soars on Solid Q2 Earnings Beat; Outlook Bright

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Dycom Industries Inc. (DY - Free Report) rallied post its second-quarter fiscal 2017 earnings beat, gaining a solid 17.6% at the close of regular trading on Mar 1, 2017. The specialty contracting services provider continued its winning streak as its fiscal second-quarter adjusted earnings of 82 cents a share trumped the Zacks Consensus Estimate of 69 cents by 18.8%. The stock moved up further, gaining 1.2% yesterday.

 

The figure also steered past the projected range of 61–73 cents. The bottom-line figure was even more remarkable on a year-over-year basis, surging a striking 51.9%, compared with the year-ago tally of 54 cents per share. Robust operating performance, solid activity on recent contracts and a stellar top-line improvement proved conducive to the bottom-line performance.

Inside the Headlines

Dycom’s fiscal second quarter 2017 contract revenues continued their strong momentum and came in at $701.1 million, up 25.3% year over year. Also, the top line surpassed the Zacks Consensus Estimate of $662 million. In addition, the figure came way ahead than the projected range of $640–$670 million.

Contract revenues grew 22.9%, on an organic basis. Acquisitions too, added $13.4 million in revenues, significantly supplementing the revenue stream.

Extensive deployment of 1-Gigabyte wireline networks by major customers and increasing rollout of fiber by cable operators in small and medium businesses boosted the top-line growth. The ongoing Connect America Fund II project also resulted in multiple lucrative projects, thus boosting the overall sales performance.

The company reported non-GAAP adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $86.2 million for the quarter, compared with $66.4 million recorded a year ago.

Dycom Industries, Inc. Price, Consensus and EPS Surprise

Dycom Industries, Inc. Price, Consensus and EPS Surprise | Dycom Industries, Inc. Quote

Liquidity

Dycom exited the quarter with cash and cash equivalents of $29.5 million compared with $33.8 million as of Jul 30, 2016. The company’s long-term debt was $740.6 million as of Jan 28, 2017, compared with $706.2 million as of Jul 30, 2016.

Guidance

Dycom issued guidance for third-quarter fiscal 2017, wherein adjusted earnings per share are projected in the range of $1.11–$1.24 on revenues within a range of $715–$745 million.

To Conclude

Dycom continues to benefit from favorable industry trends which are fueling client spending. The company’s portfolio of big clients, surging deployment of fiber-to-the-home and fiber-to-the-node technologies by telecommunication companies, and huge investment in wireline networks have proved to be staple growth drivers over the last few quarters. During the reported quarter, the company won major contracts from the Connect America Fund II project that drove sales.

We believe, the company’s strong financial position, along with diligent operational execution, will enable it to undertake strategic initiatives for expanding market share. With continued investments by huge clients, this Zacks Rank #2 (Buy) company’s growth momentum is unlikely to slow down anytime soon.

Other Stocks to Consider

Other favorably placed stocks in the broader sector include Louisiana-Pacific Corporation (LPX - Free Report) , Thor Industries, Inc. (THO - Free Report) and D.R. Horton, Inc. (DHI - Free Report) . While Louisiana-Pacific boasts a Zacks Rank #1 (Strong Buy), Thor Industries and D.R. Horton carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Louisiana-Pacific has registered a remarkable positive average surprise of 66.3% for the trailing four quarters, driven by three beats.

Thor Industries has beaten estimates each time in the trailing four quarters and boasts an average positive surprise of 24.1%.

D.R. Horton has a positive earnings surprise of 6.3%, beating estimates twice in the last four quarters.

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