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Dycom (DY) Up 7.8% Since Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Dycom Industries, Inc.DY . Shares have added about 7.8% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Dycom Q3 Earnings & Revenues Beat Estimates, Rise Y/Y

Dycom kept its winning streak alive for the fifth consecutive quarter. The company's third-quarter fiscal 2017 adjusted earnings of $1.30 a share beat the Zacks Consensus Estimate of $1.20 by 8.3%.

The figure also steered past the projected range of $1.11-$1.24. The bottom-line figure surged an impressive 20.4% compared with the year-ago figure of $1.08 per share. Robust operating performance, solid activity on recent contracts, cost discipline and a stellar top-line improvement proved conducive to earnings growth.

Inside the Headlines

Dycom's third-quarter fiscal 2017 contract revenues continued the strong momentum and came in at $786.3 million, up 18.3% year over year. Also, the top line surpassed the Zacks Consensus Estimate of $736 million and steered past the projected range of $715-$745 million.

Contract revenues grew 14.9% on an organic basis. Acquisitions also added $23.0 million, significantly supplementing the revenue stream. Extensive deployment of 1-Gigabyte wireline networks by major customers continued to fuel top-line growth during the quarter.

The company reported non-GAAP adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $108.2 million for the quarter compared with $99.1 million recorded a year ago.

Liquidity

Dycom exited the quarter with cash and cash equivalents of $19.4 million compared with $33.8 million as of Jul 30, 2016. The company's long-term debt was $811.6 million as of Apr 29, 2017 compared with $706.2 million as of Jul 30, 2016.

Guidance

Dycom issued guidance for fiscal fourth-quarter 2017, wherein adjusted earnings per share are projected in the range of $1.35-$1.50 on revenues within a range of $780-$810 million.

Notable Activities During the Quarter

During the reported quarter, Dycom completed the acquisition of telecommunications and construction services provider, Texstar Enterprises, for $26.4 million. Almost three decades old, the telecom and utilities construction company offers support and service to leading broadband and telephone companies in Southwest and Pacific Northwest.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions. In the past month, the consensus estimate has shifted lower by 19.7%.

Dycom Industries, Inc. Price and Consensus

Dycom Industries, Inc. Price and Consensus | Dycom Industries, Inc. Quote

VGM Scores

At this time, Dycom's stock has a subpar Growth Score of 'D', though it is lagging a bit on the momentum front with an 'F'. The stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate investors will probably be better served looking elsewhere.

Outlook

The Zacks Consensus Estimate for the current quarter moved down over the last 30 days. It's no surprise that the stock has a Zacks Rank #5 (Strong Sell). We expect below average returns from the stock in the next few months.

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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 Nasdaq, Inc.


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

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