Dycom Industries’ Q1 earnings beat Expectations, stock peaks: Buy or miss out?
The first quarter earnings report for Dycom Industries Inc (NYSE:DY) has just been released, and the numbers are impressive. With a non-GAAP EPS of $1.92, surpassing expectations by $0.41, and revenue hitting $1.14 billion, exceeding estimates by $50 million, Dycom has showcased its strength in the market. This marks a substantial 9.3% year-over-year increase in revenue, reflecting the company’s continued growth trajectory.
Looking ahead, Dycom anticipates further expansion, with organic contract revenues expected to grow by high-single digits compared to the previous year’s quarter, supplemented by approximately $70 million of acquired contract revenues.
Dycom Industries stands as a formidable player in the telecommunications infrastructure and utility industries. Founded in 1969, the company has evolved into a multifaceted organization, offering a comprehensive suite of specialty contracting services across 49 states in the US.
Its diverse portfolio encompasses program management, planning, engineering, design, aerial and underground construction, maintenance, and fulfillment services. With a recent acquisition of Bigham Cable Construction, Dycom has strategically expanded its footprint, particularly in the southeastern United States.
Looking forward, Dycom stands to benefit from the ongoing telecom boom, driven by the increasing demand for high-speed internet access. Major players in the industry, such as AT&T, Verizon, and Comcast, are ramping up investments in high-speed wireline networks, presenting lucrative opportunities for Dycom. Additionally, government-backed initiatives like the Broadband Equity, Access, and Deployment program are set to further fuel Dycom’s growth trajectory.
From a valuation perspective, Dycom presents an attractive investment opportunity, trading at favorable multiples compared to its industry peers. Despite the inherent cyclicality of the industry, Dycom’s solid fundamentals, coupled with favorable industry tailwinds, suggest potential outperformance in the market. However, it’s essential to remain cognizant of the company’s revenue concentration among its top customers, even as it actively works to mitigate this risk.
Now, let’s shift our focus to the technical analysis side of things, where we’ll analyze Dycom’s price action and indicators to identify potential trading opportunities. Technical analysis involves studying historical price movements and chart patterns to forecast future price direction. So, let’s roll up our sleeves and dive into the charts to uncover actionable insights amidst Dycom’s bullish trend.
Bullish tsunami: Dycom’s unstoppable bull run
Dycom’s stock has been on a steady upward trajectory since March 2020. However, the pace of this ascent shifted gears dramatically starting in October 2023. Since then, the stock has doubled in value, reflecting an unprecedented surge in bullish momentum.
DY chart by TradingView
Indicators across all timeframes are currently in deep green and hence it is not advisable to initiate a short position here. However, investors who are bullish on the stock can buy a small position at current levels and more if the stock retraces a bit after its huge surge today.
As long as the stock keeps trading above its recent swing low near $132, the bullish momentum will remain. Hence investors who have already bought the stock or will be buying it now must keep a stop loss at $130.8. If the stock continues its upward trajectory it can reach $190.2 soon, a 161.8% Fibonacci retracement from March 2020 lows near $12.
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