Dycom Gains 8% on Q4 Guidance Raise & Share Buyback Plan

Zacks

Dycom Industries Inc. DY had raised its expectations for fourth-quarter fiscal 2015 earnings. Alongside, the company authorized a new share repurchase program.

The news positively triggered investors’ hopes, which highlighted Dycom among one of the top gainers of Wednesday’s trading session on the NYSE. Encouragingly, Dycom’s shares shot up by about 8% to close at $63.48. In addition, the company has touched a new 52 week high of $63.76, yesterday.

Prompted by on-track execution of its growth initiatives, Dycom increased its fourth-quarter fiscal 2015 earnings to 79 – 87 cents per share from its previous outlook of 74 – 82 cents. The Zacks Consensus Estimate for the same is pegged at 82 cents per shares. Moreover, the company revised its revenue guidance for the quarter to $560 million and $570 million from $550 million to $570 million.

Talking about the shares buyback plan, Dycom disclosed the authorization of repurchase of an additional $40 million under its buyback program. The company will repurchase these shares time to time over the coming 18 months. Notably, Dycom has completed the shares buyback of $39.3 million from its previously authorized program of $40 million. As of Jun 30, 2015, the company had around 33.8 million shares outstanding.

Bottom-Line

We are encouraged by the company’s latest move, given its strong earnings growth momentum over the past few quarters. Dycom has been enjoying an average earnings surprise of 62.3% in the trailing four quarters.

Dycom’s business primarily benefited from increased demand for network bandwidth and mobile broadband, given the proliferation of smart phones. The company has a strong portfolio of customers, primarily telecom and wireless equipment biggies such as AT&T, Inc. T, Comcast Corporation CMCSA and Verizon Communications Inc. VZ and has been enjoying a healthy backlog level. Moreover, Dycom’s strong financial position, coupled with diligent operational execution, allows it to undertake strategic initiatives for expanding market share. Hence, we believe the Zacks Rank #1 (Strong Buy) stock is well positioned to capitalize on newer opportunities in the future.

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