Dycom trades at $410.10 per share and has stayed right on track with the overall market, gaining 9.2% over the last six months. At the same time, the S&P 500 has returned 8.4%.
Is now the time to buy DY? Find out in our full research report, it’s free.
Why Are We Positive on Dycom?
Working alongside some of the most popular mobile carriers in the world, Dycom (NYSE: DY) builds and maintains telecommunications infrastructure.
1. Skyrocketing Revenue Shows Strong Momentum
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, Dycom grew its sales at an exceptional 15% compounded annual growth rate. Its growth surpassed the average industrials company and shows its offerings resonate with customers.
2. Outstanding Long-Term EPS Growth
Analyzing the long-term change in earnings per share (EPS) shows whether a company’s incremental sales were profitable — for example, revenue could be inflated through excessive spending on advertising and promotions.
Dycom’s EPS grew at 44.5% compounded annual growth rate over the last five years, higher than its 15% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
3. Increasing Free Cash Flow Margin Juices Financials
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
As you can see below, Dycom’s margin expanded by 5.7 percentage points over the last five years. The company’s improvement shows it’s heading in the right direction, and we can see it became a less capital-intensive business because its free cash flow profitability rose more than its operating profitability. Dycom’s free cash flow margin for the trailing 12 months was 7.3%.
Final Judgment
These are just a few reasons why we’re bullish on Dycom. At $410.10 per share (or 24.4× forward P/E), is now the right time to buy the stock? See for yourself in our comprehensive research report, it’s free.
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