Shares of Dycom Industries Inc. DY scaled a new 52-week high of $60.39 on May 22, as it gained momentum following strong third-quarter fiscal 2015 earnings results. This specialty contracting stock closed the session at $58.96, reflecting a solid year-to-date return of 67.8%. The trading volume for the session was around 0.5 million shares.
Despite scaling such a high, we believe the Zacks Rank #1 (Strong Buy) stock has plenty of upside left, given the rising demand for network bandwidth and mobile broadband and an expected long-term EPS growth rate of 16.33%.
Growth Driving Factors
Dycom reported third-quarter fiscal 2015 earnings per share of 58 cents, exceeding the Zacks Consensus Estimate by 56.7% and the year-ago figure by 152.2%. The stellar performance was primarily attributable to solid revenue growth in the quarter. Amid proliferation of smart phones, the company particularly benefited from extensive deployment of 1-Gigabyte wireline networks by major customers.
Additionally, Dycom enjoyed a robust backlog level of $2.912 billion at the end of the quarter – reflecting a year-over-year rise of about 42.4%. Encouragingly, the company boasts a strong client base, primarily comprising telecom and wireless equipment biggies such as AT&T, Inc. T, Comcast Corporation CMCSA and Verizon Communications Inc. VZ. In the reported quarter, about 62.2% of the company’s total revenue was derived from its top five customers, which led to a year-over-year increase of 23.2% on an organic basis. Going forward, we expect an improving economy and solid industry environment, fuelled by huge network investments, to offer favorable commercial opportunities for Dycom.
Echoing positive sentiments, over the last 7 days, the Zacks Consensus Estimate for 2015 and 2016 earnings per share rocketed around 17% and 13%, respectively to $2.12 and $2.45, correspondingly.
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