Dycom Industries, Inc. (DY): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
We are reaffirming our Neutral recommendation on Dycom Industries with a target price of $27. This specialty contracting firm reported modest fourth-quarter 2014 results. The company's business is dependent upon the level of capital expenditures. Recently, the ongoing changes in the telecommunications industry are leading to uncertainty in capital expenditure levels which can prove to be a headwind for the company. Further, unpredictable weather conditions can weigh on its margins significantly. However, the company has been benefiting from growing demand for high-speed mobile Internet and 4G/LTE services which remains a positive.

Overview:

Dycom Industries Inc. (DY) is a North America-based specialty contracting firm operating in the telecom industry. The company, which was listed on NYSE in the 1990s, provides diverse services such as engineering, construction, maintenance and installation services for the cable and telephone companies.

Moreover, Dycom specializes in providing construction management and assessment services to various telephone and cable operators. Furthermore, the company focuses on designing the fiber optic, copper and coaxial cable systems. They also undertake the necessary excavation and construction work for projects. The company provides these services to telecom companies for setting up new networks, apart from providing support services for maintaining and expanding existing networks. Though the major part of the company's revenues is obtained from telecom industry, it also provides some services for the Underground Facility Locating, Gas and Electricity companies.

Dycom provides the specialty constructing services comprises of the following:


Engineering: Dycom provides integrated services for designing aerial, underground and buried fiber optic, copper, and coaxial cable systems for telecom, cable and multiple system operators. These services include providing construction management, skilled personnel for the inspections and comprehensive engineering services, after obtaining the required permits. These systems are designed by the external plant engineers and drafters who are responsible for making an efficient transmission network to connect the consumer site with the service provider's station. Apart from this, the company also provides the telecom providers with engineering services for designing concept boxes and terminals for the service area, the equipments required for smooth transitions and drops for both buried and aerial systems. The company also manages the smooth functioning of feeder and distribution cable pairs and routing of fiber cable systems.

Construction, Maintenance, and Installation: Dycom specializes in the placement and linking of fiber, copper, and coaxial cables. The company also provides the tools and equipments to do the same after completing the required excavation. It provides installation, maintenance and repair services for the new and existing networks. Apart from these, Dycom undertakes the installation and maintenance of such products like digital video recorders, set top boxes and modems for the subscribers of cable television system. For the wireless network, the company's service package comprises of tower construction, installation of lines and antenna, constructing foundation and equipment pad, fabrication for the required equipment and materials as well as testing services at the site. The company's premise wiring services are useful for various entities including both public and private ones.

Underground Facility Locating Services: The company provides underground facility locating services to a number of utility companies to avoid damage of the underground facilities like telephone, cable television, power, water, sewer, and gas lines. Dycom's expertise in these not only minimizes the damage but also controls its impact on the people in the surrounding areas

Electric and Gas Utilities and Other Construction and Maintenance Services: Dycom also offers services to electric and gas utility companies for both the construction and maintenance of gas pipelines and power distribution network. These services are generally provided on a stand-alone basis. However, at times the company is required to provide comprehensive services for deploying both telecom and electric infrastructure at new constructions. Apart from these, the company is adept in installation and maintenance of natural gas transmission networks.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

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As of 12/19/2014, 04:15 PM


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