Winners And Losers Of Q3: Dycom (NYSE:DY) Vs The Rest Of The Engineering and Design Services Stocks

The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how engineering and design services stocks fared in Q3, starting with Dycom (NYSE:DY).

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 strong Q3. As a group, revenues beat analysts’ consensus estimates by 2.6% while next quarter’s revenue guidance was 0.7% below.

Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 13.2% 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 $1.45 billion, up 14.1% year on year. This print exceeded analysts’ expectations by 3%. Overall, it was an exceptional quarter for the company with a solid beat of analysts’ adjusted operating income estimates and an impressive beat of analysts’ EBITDA estimates.

“We delivered an exceptional third quarter with record revenue, profitability and backlog, reinforcing our industry leadership and operational discipline. As a result of our strong performance, we are increasing the midpoint of our full-year revenue outlook,” said Dan Peyovich, Dycom’s President and Chief Executive Officer.

Interestingly, the stock is up 10.2% since reporting and currently trades at $326.49.

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

Best Q3: 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 $689 million, up 16% year on year, outperforming analysts’ expectations by 11.3%. The business had an incredible quarter with a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ revenue estimates.

Sterling achieved the biggest analyst estimates beat and highest full-year guidance raise among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 19.5% since reporting. It currently trades at $316.05.

Is now the time to buy Sterling? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: 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, up 1.6% year on year, falling short of analysts’ expectations by 3.3%. It was a slower quarter as it posted a significant miss of analysts’ revenue estimates and full-year EBITDA guidance slightly missing analysts’ expectations.

AECOM delivered the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 22% since the results and currently trades at $102.92.

Read our full analysis of AECOM’s results here.

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 16.4% year on year. This result met analysts’ expectations. More broadly, it was a mixed quarter as its performance in some other areas of the business was disappointing.

EMCOR had the weakest full-year guidance update among its peers. The stock is down 25.2% since reporting and currently trades at $581.36.

Read our full, actionable report on EMCOR here, it’s free for active Edge members.

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 $3.97 billion, up 22% year on year. This print topped analysts’ expectations by 1.6%. It was a strong quarter as it also logged an impressive beat of analysts’ revenue estimates and a solid beat of analysts’ adjusted operating income estimates.

MasTec achieved the fastest revenue growth among its peers. The stock is down 9.7% since reporting and currently trades at $193.10.

Read our full, actionable report on MasTec here, it’s free for active Edge members.

Market Update

The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.

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