Dycom Industries (DY) down 10.2% since last earnings report: can it bounce back?
IIt has been about a month since the last Dycom Industries (DY) earnings report. Stocks lost around 10.2% during that time, underperforming the S&P 500.
Will the recent negative trend continue until its next results release, or is Dycom Industries likely to have a breakthrough? Before we dive into how investors and analysts have reacted in recent times, let’s take a look at the latest earnings report to better understand the important catalysts.
Dycom (DY) Third Quarter Profits and Revenue Surpass Estimates
Dycom Industries Inc. reported strong results for the third quarter of fiscal 2022 (ended October 30, 2021), where both earnings and revenue exceeded the respective Zacks consensus estimate.
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Income and income discussion
Dycom reported adjusted earnings of 95 cents per share, beating Zacks’ consensus estimate of 79 cents by 20.3%. During the period last year, profits were $ 1.06 per share.
Contract revenue of $ 854 million increased 5.4% year-over-year and exceeded the consensus mark of 2%. The company experienced higher demand from two of the top five customers. Dycom deployed 1 gigabit wired networks, wireless / wired converged networks and wireless networks during the current quarter.
Its five main clients contributed 65.4% to total contract revenue, representing organic growth of 6.6%. Overall, sales for the top five customers were down 3.5% organically. Revenues for all other customers grew 32.5% organically for the quarter.
Dycom’s largest customer, AT&T (accounting for 23.4% of total revenue) grew 68% on an organic basis. This is its third consecutive quarter of organic growth. Comcast (the second largest customer) added 14.2% to total revenue, Lumen Technologies 12.1% and Verizon and Frontier accounted for 10.9% and 4.8% of total revenue, respectively. Frontier experienced organic growth of 118.6%. It should be noted that this is the 11th consecutive quarter in which all of DY’s other customers overall, excluding the top five customers, have grown organically.
Dycom’s backlog at the end of the reported quarter was $ 5.896 billion, up from $ 6.810 billion at the end of fiscal 2021 and $ 5.412 billion in the comparable period of the previous year . Of the backlog, $ 2.938 billion is expected to be completed over the next 12 months.
Gross margin for the quarter was 17.3%, down 140 basis points from last year’s level. Adjusted EBITDA margin of 9.7% contracted 180 basis points from last year’s level. The decrease reflected rising fuel costs and the impact of lower revenues for several large customers.
As of October 30, 2021, Dycom had cash and cash equivalents of $ 263.7 million, compared to $ 11.8 million as of January 30, 2021. Long-term debt was $ 827.2 million at the end of the current quarter, compared to $ 501.6 million at the end of fiscal 2021.
View of the fiscal fourth quarter
For the fiscal fourth quarter (ended Jan. 29, 2021), he expects contract revenue to grow modestly year over year. Adjusted EBITDA margin (as a percentage of contract revenue) is expected to vary from consistent to slightly higher.
How have the estimates evolved since?
As it turns out, new estimates have trended downward over the past month. The consensus estimate has changed to -210.71% due to these changes.
Currently, Dycom Industries has an excellent Growth Score of A, although it lags a bit behind the Momentum Score front with a B. Charting a somewhat similar path, the stock received a rating. of A on the value side, which puts it in the top quintile for this investment strategy.
Overall, the stock has an overall VGM score of A. If you’re not strategy-focused, this score is the one you should be interested in.
The estimates have generally trended downward for the stock, and the magnitude of these revisions indicates a downward change. Notably, Dycom Industries has a Zacks Rank # 3 (Hold). We expect the stock to come back online in the coming 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.