Dycom Industries (DY - Free Report) appears an attractive pick given a noticeable improvement in the company's earnings outlook. The stock has been a strong performer lately, and the momentum might continue with analysts still raising their earnings estimates for the company.
The upward trend in estimate revisions for this provider of specialty contracting services reflects growing optimism of analysts on its earnings prospects, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- has this insight at its core.
The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.
For Dycom Industries, strong agreement among the covering analysts in revising earnings estimates upward has resulted in meaningful improvement in consensus estimates for the next quarter and full year.
The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:
12 Month EPS
Current-Quarter Estimate Revisions
The earnings estimate of $0.66 per share for the current quarter represents a change of -39.45% from the number reported a year ago.
Over the last 30 days, one estimate has moved higher for Dycom Industries while two have gone lower. As a result, the Zacks Consensus Estimate has increased 11.86%.
Current-Year Estimate Revisions
For the full year, the company is expected to earn $1.98 per share, representing a year-over-year change of -12.78%.
The revisions trend for the current year also appears quite promising for Dycom Industries, with four estimates moving higher over the past month compared to one negative revision. The consensus estimate has also received a boost over this time frame, increasing 20.58%.
Favorable Zacks Rank
The promising estimate revisions have helped Dycom Industries earn a Zacks Rank #2 (Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.
While strong estimate revisions for Dycom Industries have attracted decent investments and pushed the stock 13.6% higher over the past four weeks, further upside may still be left in the stock. So, you may consider adding it to your portfolio right away.