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Will Customer-Related Challenges Ail Dycom (DY) Q2 Earnings?

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Dycom Industries, Inc. (DY - Free Report) is scheduled to report second-quarter fiscal 2022 results on Sep 1, before the opening bell.

In the last reported quarter, it reported an adjusted loss of 4 cents per share against the Zacks Consensus Estimate of earnings of 13 cents and prior year’s earnings of 36 cents. Revenues also declined 10.7% and missed the consensus mark by 5.1%. Dycom has been witnessing high demand from a few customers. Also, it has been facing issues regarding a large customer program.

This specialty contracting services provider — which shares space in the Building Products - Heavy Construction industry with EMCOR Group, Inc. (EME - Free Report) , MasTec, Inc. (MTZ - Free Report) and North American Construction Group Ltd. (NOA - Free Report) — missed earnings estimates in two of the trailing four quarters, with an average negative surprise of 74.9%.

Earnings & Revenue Expectations

The Zacks Consensus Estimate for Dycom’s fiscal second-quarter earnings has declined 9.9% to 73 cents per share over the past 30 days. The bottom-line estimate indicates a 38.1% decline on a year-over-year basis. The consensus estimate for revenues is $812.74 million, indicating 1.4% year-over-year fall.

Dycom Industries, Inc. Price and EPS Surprise

Dycom Industries, Inc. Price and EPS Surprise

Dycom Industries, Inc. price-eps-surprise | Dycom Industries, Inc. Quote

Factors to Note

Dycom’s revenues and earnings are expected to have declined in the fiscal second quarter due to the impact of a large customer program. Also, lower revenues from other large customers that are expected to have reduced spending in the first half of this calendar year are likely to have added to the woes. The company has been experiencing lower contributions from top five customers on account of challenging market conditions, project delays and uncertain customer plans.

During fiscal first-quarter earnings call, it anticipated contract revenues to be in line to modestly lower year over year. Fiscal second-quarter non-GAAP adjusted EBITDA, as a percentage of contract revenues, is anticipated to decrease from the year-ago period. It also expects gross margin to be impacted by 200 basis points during the to-be-reported quarter.

What the Zacks Model Says

Our proven model does not conclusively predict an earnings beat for Dycom this time around. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to deliver an earnings beat. This is not the case here, as you will see below.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -2.74%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Dycom currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank stocks here.