Engineering and Design Services Stocks Q2 Highlights: Dycom (NYSE:DY)

Earnings results often indicate what direction a company will take in the months ahead. With Q2 behind us, let’s have a look at Dycom (NYSE:DY) and its peers.

Companies providing engineering and design services boast ever-evolving technical expertise. Compared to their counterparts who manufacture and sell physical products, these companies can also pivot faster to more trending areas due to their smaller physical asset bases. Green energy and water conservation, for example, are current themes driving incremental demand in this space. On the other hand, those providing engineering and design services are at the whim of construction and infrastructure project volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates.

The 5 engineering and design services stocks we track reported a very strong Q2. As a group, revenues beat analysts’ consensus estimates by 2.8% while next quarter’s revenue guidance was in line.

Thankfully, share prices of the companies have been resilient as they are up 5.6% on average since the latest earnings results.

Dycom (NYSE:DY)

Working alongside some of the most popular mobile carriers in the world, Dycom (NYSE:DY) builds and maintains telecommunications infrastructure.

Dycom reported revenues of $1.38 billion, up 14.5% year on year. This print fell short of analysts’ expectations by 2.5%, but it was still a strong quarter for the company with an impressive beat of analysts’ adjusted operating income estimates.

“Dycom’s first-half performance confirms the strength of our strategy, disciplined execution and ability to capitalize on a rapidly expanding market. This quarter, we delivered record revenue within our range of expectations and record earnings that exceeded our expectations. We meaningfully improved margins through operational efficiency and operating leverage, and strengthened our financial position through measured cash flow management,” said Dan Peyovich, Dycom’s President and Chief Executive Officer.

Unsurprisingly, the stock is down 3.9% since reporting and currently trades at $258.83.

We think Dycom is a good business, but is it a buy today? Read our full report here, it’s free.

Best Q2: EMCOR (NYSE:EME)

Through its network of over 70 subsidiaries, EMCOR (NYSE:EME) provides electrical, mechanical, and building construction and services

EMCOR reported revenues of $4.30 billion, up 17.4% year on year, outperforming analysts’ expectations by 4.9%. The business had a stunning quarter with a solid beat of analysts’ EBITDA estimates.

However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $639.39.

Is now the time to buy EMCOR? Access our full analysis of the earnings results here, it’s free.

Slowest Q2: AECOM (NYSE:ACM)

Founded in 1990 when a group of engineers from five companies decided to merge, AECOM (NYSE:ACM) provides various infrastructure consulting services.

AECOM reported revenues of $4.18 billion, flat year on year, falling short of analysts’ expectations by 3.3%. It was a mixed quarter as it posted a solid beat of analysts’ adjusted operating income estimates.

AECOM delivered the weakest performance against analyst estimates and slowest revenue growth in the group. Interestingly, the stock is up 14.3% since the results and currently trades at $128.08.

Read our full analysis of AECOM’s results here.

Sterling (NASDAQ:STRL)

Involved in the construction of a major highway, the Grand Parkway in Houston, TX, Sterling Infrastructure (NASDAQ:STRL) provides civil infrastructure construction.

Sterling reported revenues of $614.5 million, up 5.4% year on year. This number surpassed analysts’ expectations by 10.8%. Overall, it was an exceptional quarter as it also recorded a solid beat of analysts’ EBITDA estimates and full-year EBITDA guidance exceeding analysts’ expectations.

Sterling pulled off the biggest analyst estimates beat but had the weakest full-year guidance update among its peers. The stock is up 17% since reporting and currently trades at $318.82.

Read our full, actionable report on Sterling here, it’s free.

MasTec (NYSE:MTZ)

Involved in the 1996 Olympic Games MasTec (NYSE:MTZ) is an infrastructure construction company that specializes in the telecommunications, energy, and utility industries.

MasTec reported revenues of $3.54 billion, up 19.7% year on year. This result topped analysts’ expectations by 4.2%. It was a strong quarter as it also put up a solid beat of analysts’ adjusted operating income estimates and full-year revenue guidance beating analysts’ expectations.

MasTec delivered the fastest revenue growth and highest full-year guidance raise among its peers. The stock is flat since reporting and currently trades at $190.17.

Read our full, actionable report on MasTec here, it’s free.

Market Update

As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.

Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Growth Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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