Shares of Dycom Industries, Inc. (DY) plunged 5.3% on September 1 to close at $71.33 after the provider of specialty contracting services across the U.S. reported worse-than-expected Q2 results and an anticipated decline in margins for the upcoming third quarter.
Disappointingly, the company reported adjusted earnings of $0.60 per share, falling short of analysts’ expectations of $0.79 per share. The company reported adjusted earnings of $1.18 per share in the prior-year period.
Further, contract revenues declined 4.4% year-over-year to $787.6 million, lagging consensus estimates of $817.9 million. (See Dycom stock charts on TipRanks)
During the earnings call, management commented that the company’s size and financial strength position it well to maintain a strong customer presence across its end markets.
Management further added, “Customers are consolidating supply chains creating opportunities for market share growth and increasing the long-term value of our maintenance and operations business”.
Looking ahead at the third quarter, the company forecasts contract revenues to be in line with the prior-year period. However, the company expects gross margin to decline 125 bps year-over-year and a decline in adjusted EBITDA.
The stock has picked up a rating from one analyst in the past three months. Wells Fargo analyst Eric Luebchow recently upgraded Dycom from Hold to Buy with a price target of $90 (26.2% upside potential).
TipRanks data shows that financial blogger opinions are 66% Bullish on DY, compared to a sector average of 72%.