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6 Reasons Why We Believe Dycom (DY) is Set to Grow Further
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Dycom Industries Inc. (DY - Free Report) , a specialty contracting firm operating in the telecom industry, has been performing strongly of late.The company boasts a strong portfolio of customers, primarily the telecom and wireless equipment biggies such as AT&T, Comcast, CenturyLink and Verizon, to name a few. If you haven’t ridden its share price appreciation yet, the time is right for you to add the stock to your portfolio as we believe it is poised to carry the momentum ahead.
Strong Q2 Performance, Upbeat Guidance
Dycom’s fiscal second-quarter adjusted earnings of 82 cents a share trumped the Zacks Consensus Estimate of 69 cents by 18.8%. 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. Earnings also zoomed past management's projected range of 61–73 cents.
Dycom’s revenues also continued their strong momentum and rose 25.3% year over year. Sales jumped 22.9% on an organic basis as well. Encouragingly, this marked the ninth consecutive quarter of double-digit organic growth for the company.
Dycom issued upbeat 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.
Positive Earnings Surprise History
The specialty contracting services provider also has a remarkable earnings surprise history, with an average positive surprise of 17.3% for the trailing four quarters, beating estimates all through.
Price Performance
Dycom has had a solid run on the bourse, rallying a striking 42% over the past one year. The gain is more than double of the Zacks classified Building Products - Heavy Construction industry average of 18.2%.
Solid Zacks Rank
This Zacks Rank #2 (Buy) stock has a VGM score of “A”. Our VGM Score identifies stocks that have the most attractive value, growth and momentum characteristics. A strong VGM score, especially when combined with a good Zacks Rank, indicates much stronger chances of success.
Estimates Moving Up
Over the past month, Dycom’s earnings estimates moved north, indicating analysts’ optimism. The companywitnessed six upward estimate revisions compared to none downward for both the current quarter and current fiscal, over the past 30 days.
This has led the Zacks Consensus Estimate for the current quarter to increase 5.3% to $1.20 and for fiscal 2017 earnings to rise 6.6% to $5.48. This indicates definite bullish analyst sentiment for the stock.
Growth Prospects
Dycom’s business primarily benefits from increased demand for network bandwidth and mobile broadband, given the proliferation of smart phones.Presently, a number of major industry participants are deploying significant wireline networks across broad sections of the country, thereby creating significant opportunities for Dycom.
The company believes that unprecedented favorable industry trends like surging demand for 1-Gigabyte deployments from several large customers, huge investment in wireline networks, cable capacity projects and the ongoing Connect America Fund II project will significantly drive growth in market share.
The year 2016 witnessed massive investments for wireline networks, much higher than that in the 90’s, allowing customers to embark on multi-year capital spending initiatives. This provides Dycom with ample opportunities to drive growth through market share and geographic footprint expansion. The company has been benefiting significantly from the extensive deployment of 1-Gigabyte wireline networks by major customers.
Notably, spending from the company’s top customers is only accelerating. For the fiscal second quarter, about 76.2% of the company’s total revenue was derived from its top five customers, a year-over-year increase of 37.1% on an organic basis. Such strong organic growth is a highly encouraging sign of the company’s future prospects.
Dycom registered a healthy backlog level of $5.112 billion at the end of the fiscal second quarter. The company recently secured new customer business from AT&T, Comcast, CenturyLink and Windstream Holdings, which will add to its growth momentum. We expect the company’s string of contract wins and strong customer relationships to act as growth drivers.
PulteGrouphas an average positive earnings surprise of 13.5% for the trailing four quarters. Louisiana-Pacific has an impressive average earnings surprise of 66.3% for the last four quarters, while NVR, Inc. has an average earnings surprise of 0.90% for the past four quarters.
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6 Reasons Why We Believe Dycom (DY) is Set to Grow Further
Dycom Industries Inc. (DY - Free Report) , a specialty contracting firm operating in the telecom industry, has been performing strongly of late.The company boasts a strong portfolio of customers, primarily the telecom and wireless equipment biggies such as AT&T, Comcast, CenturyLink and Verizon, to name a few. If you haven’t ridden its share price appreciation yet, the time is right for you to add the stock to your portfolio as we believe it is poised to carry the momentum ahead.
Strong Q2 Performance, Upbeat Guidance
Dycom’s fiscal second-quarter adjusted earnings of 82 cents a share trumped the Zacks Consensus Estimate of 69 cents by 18.8%. 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. Earnings also zoomed past management's projected range of 61–73 cents.
Dycom’s revenues also continued their strong momentum and rose 25.3% year over year. Sales jumped 22.9% on an organic basis as well. Encouragingly, this marked the ninth consecutive quarter of double-digit organic growth for the company.
Dycom issued upbeat 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.
Positive Earnings Surprise History
The specialty contracting services provider also has a remarkable earnings surprise history, with an average positive surprise of 17.3% for the trailing four quarters, beating estimates all through.
Price Performance
Dycom has had a solid run on the bourse, rallying a striking 42% over the past one year. The gain is more than double of the Zacks classified Building Products - Heavy Construction industry average of 18.2%.
Solid Zacks Rank
This Zacks Rank #2 (Buy) stock has a VGM score of “A”. Our VGM Score identifies stocks that have the most attractive value, growth and momentum characteristics. A strong VGM score, especially when combined with a good Zacks Rank, indicates much stronger chances of success.
Estimates Moving Up
Over the past month, Dycom’s earnings estimates moved north, indicating analysts’ optimism. The companywitnessed six upward estimate revisions compared to none downward for both the current quarter and current fiscal, over the past 30 days.
This has led the Zacks Consensus Estimate for the current quarter to increase 5.3% to $1.20 and for fiscal 2017 earnings to rise 6.6% to $5.48. This indicates definite bullish analyst sentiment for the stock.
Growth Prospects
Dycom’s business primarily benefits from increased demand for network bandwidth and mobile broadband, given the proliferation of smart phones.Presently, a number of major industry participants are deploying significant wireline networks across broad sections of the country, thereby creating significant opportunities for Dycom.
The company believes that unprecedented favorable industry trends like surging demand for 1-Gigabyte deployments from several large customers, huge investment in wireline networks, cable capacity projects and the ongoing Connect America Fund II project will significantly drive growth in market share.
The year 2016 witnessed massive investments for wireline networks, much higher than that in the 90’s, allowing customers to embark on multi-year capital spending initiatives. This provides Dycom with ample opportunities to drive growth through market share and geographic footprint expansion. The company has been benefiting significantly from the extensive deployment of 1-Gigabyte wireline networks by major customers.
Notably, spending from the company’s top customers is only accelerating. For the fiscal second quarter, about 76.2% of the company’s total revenue was derived from its top five customers, a year-over-year increase of 37.1% on an organic basis. Such strong organic growth is a highly encouraging sign of the company’s future prospects.
Dycom registered a healthy backlog level of $5.112 billion at the end of the fiscal second quarter. The company recently secured new customer business from AT&T, Comcast, CenturyLink and Windstream Holdings, which will add to its growth momentum. We expect the company’s string of contract wins and strong customer relationships to act as growth drivers.
Stocks to Consider
Other favorably placed stocks in the broader sector include PulteGroup, Inc. (PHM - Free Report) , Louisiana-Pacific Corp. (LPX - Free Report) and NVR, Inc. (NVR - Free Report) . All of these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
PulteGrouphas an average positive earnings surprise of 13.5% for the trailing four quarters. Louisiana-Pacific has an impressive average earnings surprise of 66.3% for the last four quarters, while NVR, Inc. has an average earnings surprise of 0.90% for the past four quarters.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>