Will Dycom's Strong Productivity Gains Continue Into Fiscal 2027?

Dycom Industries, Inc. DY has been gaining from improved execution across fiber-to-the-home, hyperscaler-driven fiber builds, wireless programs and service and maintenance work. The positive trend is backed by the strong public infrastructure funding environment, alongside the recent optimism surrounding the Broadband Equity, Access and Deployment (BEAD) program. During the first nine months of fiscal 2026, the company’s contract revenues grew 13% year over year to $4.09 billion, with adjusted EBITDA margin increasing 140 basis points (bps) to 14.1%.

Besides market tailwinds, Dycom’s in-house efforts are also boding well. As of the third quarter of fiscal 2026, the company reduced its days sales outstanding (DSO) to 105 days, reflecting a 14-day year-over-year improvement, underscoring tighter project management and billing discipline. Management emphasized that these improvements were the result of deliberate internal focus rather than one-off timing benefits, implying a more durable baseline going forward.

Looking ahead to fiscal 2027, several structural drivers are expected to support the continued productivity of Dycom. Firstly, a backlog of $8.22 billion, with nearly $5 billion expected to convert within the next 12 months, allows DY to plan labor, equipment and execution more efficiently. Secondly, the company is in the midst of a multi-phase ERP rollout scheduled to continue through fiscal 2027, which management expects to further standardize processes and unlock incremental efficiencies.

Weather-related challenges, the ramp of BEAD-funded projects and the integration of new capabilities introduce execution risk. Nonetheless, Dycom’s expanding mix of recurring service and maintenance revenues, combined with its scale and improving systems, suggests that productivity gains achieved in fiscal 2026 are more structural than cyclical. That said, DY appears well-positioned to carry a higher productivity profile into fiscal 2027, supported by backlog visibility, operational discipline and ongoing systems investment.

Earnings Estimate Trend Favors Dycom

Dycom’s earnings estimates for fiscal 2026 and fiscal 2027 have trended upward over the past 30 days, respectively. The estimated figures for fiscal 2026 and fiscal 2027 imply year-over-year growth of 26.9% and 35%, respectively.

The robust market fundamentals and DY’s strategic in-house capabilities are likely to have induced bullish sentiments among analysts.

DY Stock’s Price Performance vs. Other Market Players

Shares of this specialty contracting firm, operating in the telecom industry, have trended upward 42.3% in the past six months, outperforming the Zacks Building Products - Heavy Construction industry, the broader Construction sector and the S&P 500 Index.

Besides, other market players, including Quanta Services, Inc. PWR and Primoris Services Corp. PRIM, offer substantial competition to Dycom in the public infrastructure market, especially across telecommunications and power infrastructure project work. In the past six months, shares of Quanta and Primoris Services have gained 14.5% and 65.7%, respectively.

DY’s Valuation Trend

DY stock is currently trading at a premium compared with the industry peers, with a forward 12-month price-to-earnings (P/E) ratio of 24.65, as evidenced by the chart below.

Notably, Quanta and Primoris Services are currently trading at a forward 12-month P/E ratio of 34.97 and 22.28, respectively.

Dycom stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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