Why Is Dycom Industries Up 11.4% Since Last Earnings Report?

A month has gone by since the last earnings report for Dycom Industries DY. Shares have added about 11.4% in that time frame, outperforming the S&P 500.

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

Dycom Q2 Earnings & Revenues Top Estimates, Up Y/Y

Dycom Industries Inc. reported strong results in second-quarter fiscal 2025 (ended Jul 27, 2024). Both the top and the bottom line surpassed their respective Zacks Consensus Estimate.

Contract revenues and earnings increased on a year-over-year basis. The upside was backed by solid organic growth from the top five customers and strong contributions from all other customers.

Earnings & Revenue Discussion

Dycom reported adjusted earnings per share of $2.46, beating the Zacks Consensus Estimate of $2.18 by 12.8% and increasing 21.2% from $2.03 year over year.

Contract revenues of $1.20 billion surpassed the consensus mark of $1.19 billion by 0.7% and rose 15.5% year over year. Contract revenues increased 9.2% on an organic basis. Acquisitions contributed $65.9 million to contract revenues.

The company's top five customers contributed 54.9% to total contract revenues, which inched up 7.1%, organically. Revenues from all other customers increased 12.3% organically in the quarter. The period marks the 22nd consecutive period of organic growth for DY's all other customers in aggregate, excluding the top five.

Dycom's largest customer, AT&T, contributed 17.5% to total revenues and increased 20.6% organically. Lumen (the second-largest customer) contributed 13.6% to total revenues and inched up 0.7% organically. Comcast contributed 8.8%, Verizon represented 10.1% and Charter added 2.1% to total revenues. The company's fourth customer contributed to 8% of revenues and surged 73.2% organically.

Fiber construction revenues from electric utilities were $88.7 million.

Operations & Backlog Details

Adjusted EBITDA increased 21.1% to $158.3 million from $130.8 million reported a year ago. Adjusted EBITDA margin of 13.2% expanded 60 basis points from the year-ago level.

Dycom's backlog at the end of the fiscal second quarter totaled $6.834 billion compared with $6.917 billion at the fiscal 2024 end. Of the backlog, $3.830 billion is projected to be completed in the next 12 months.

Financials

As of Jul 27, 2024, DY had liquidity of $622 million, including cash and cash equivalents worth $19.6 million compared with $101.1 million as of Jan 27, 2024. Long-term debt was $942.4 million at the fiscal second-quarter end, up from $791.4 million at the fiscal 2024 end.

At the end of the fiscal second quarter, DY repurchased 210,000 shares of its common stock for $29.8 million at an average price of $141.84 per share.

Fiscal Third-Quarter View

For the fiscal third quarter (ending on Oct 26, 2024), DY expects contract revenues to grow by mid-to-high single digits year over year. It expects $75 million of acquired contract revenues for the quarter.

The adjusted EBITDA margin is expected to increase 20-50 bps from the year-ago levels. For the said period, Dycom expects the effective tax rate to be 26.5% and diluted shares of 29.6 million. Interest expenses, net, is likely to be $17.5 million and amortization expenses to be $9.5 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

VGM Scores

Currently, Dycom Industries has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

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

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Dycom Industries has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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