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Dycom Industries, Inc.

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Dycom Industries, Inc. (DY - Free Report) is a leading provider of specialty contracting services that has been delivering positive earnings surprises for the last several quarters, averaging 55% over the last four. The trend for this Zacks #2 Rank (Buy) should continue into next year as well.

A Solid Fiscal Third Quarter

On May 22, Dycom reported fiscal third quarter 2012 (ending April 28, 2012) earnings per share of 28 cents, beating the Zacks Consensus Estimate by 33% and jumping a whopping 600% over last year’s 4 cents.

Revenues grew 17.3% year over year to $296.1 million, driven by strong growth in the Telecommunications services business. This is the fifth straight quarter of organic revenue growth, primarily driven by expansion of existing contracts and additional contracts from rural broadband projects.

The Zacks Consensus Estimates for 2012 and 2013 increased 6% and 1% to $1.17 and 1.41, respectively, in the last 60 days.

Valuation Looks Reasonable

Dycom shares have been highly volatile over the past year, trading at a premium of 2.0%-60.9% to the industry and a premium of 4.1%-15.7% to the S&P 500. Therefore, considering the recent dip in share prices and consistent growth trends, there is a strong possibility of considerable upside from these levels.

Chart Shows Growth Potential

Although there has been some fluctuation in Dycom share prices over the last few quarters, the company had an impressive run over the past year. The price has shot up from $1.34 in January 2009 to $43.06 in June 2012.

The price and consensus chart shows that estimates have consistently been on the rise with the stock price following the movement in estimate revisions. With 2012 and 2013 estimates increasing, the stock price should also increase in keeping with the trend seen so far.

Headquartered in Palm Beach Gardens, Florida, Dycom Industries is a leading provider of specialty contracting services. Its offerings include engineering, construction, maintenance and installation services to telecommunications providers, underground facility locating services to various utilities and other construction and maintenance services to electric and gas utilities and others. The company currently has a market cap of $618.2 million and was founded in 1969.

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