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Dycom Industries Shares Popped: What You Need to Know

By Brian D. Pacampara, CFA - Updated Apr 6, 2017 at 9:38PM

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Is this meaningful? Or just another movement?

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of telecommunications contractor Dycom Industries (NYSE: DY) climbed 10% on Thursday after its quarterly results topped Wall Street expectations.

So what: Thanks in large part to an 8.9% increase in contract revenue, the company posted an adjusted third-quarter profit of $0.10 per share, versus the average analyst estimate of just $0.05 per share. Dycom was hit particularly hard during the downturn as customers slashed spending, but steadily rebounding demand has fueled year-over-year top-line growth in recent quarters.

Now what: Don't let today's double-digit pop keep you from looking into Dycom. Along with the market-topping results, the company announced plans to repurchase up to $20 million worth of shares over the next year and a half. When you consider that Dycom still trades at price-to-sales discount to rivals Quanta Services (NYSE: PWR) and MYR Group (Nasdaq: MYRG) and remains down about 50% from its five-year highs, following management's lead might not be such a bad idea.

Interested in more info on Dycom? Add it to your watchlist.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Dycom Industries, Inc. Stock Quote
Dycom Industries, Inc.
DY
$94.62 (3.51%) $3.21
Quanta Services, Inc. Stock Quote
Quanta Services, Inc.
PWR
$113.59 (2.79%) $3.08
MYR Group Inc. Stock Quote
MYR Group Inc.
MYRG
$111.99 (2.72%) $2.97

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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