Dycom (NYSE:DY) Delivers Impressive Q1, Stock Soars

Telecommunications company Dycom (NYSE:DY) reported Q1 CY2025 results topping the market’s revenue expectations, with sales up 10.2% year on year to $1.26 billion. Guidance for next quarter’s revenue was better than expected at $1.41 billion at the midpoint, 2% above analysts’ estimates. Its GAAP profit of $2.09 per share was 27.1% above analysts’ consensus estimates.

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“Dycom had a strong start to fiscal 2026 with continued progress against our goals, excellent financial and operational performance, and a record backlog. Based on our first quarter results and a favorable demand outlook, we are increasing our full year fiscal 2026 contract revenue outlook and remain positioned for continued success,” said Dan Peyovich, Dycom’s President and Chief Executive Officer.

Company Overview

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

Sales Growth

A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, Dycom grew its sales at a decent 7.7% compounded annual growth rate. Its growth was slightly above the average industrials company and shows its offerings resonate with customers.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Dycom’s annualized revenue growth of 10.1% over the last two years is above its five-year trend, suggesting its demand recently accelerated.

This quarter, Dycom reported year-on-year revenue growth of 10.2%, and its $1.26 billion of revenue exceeded Wall Street’s estimates by 5.7%. Company management is currently guiding for a 16.8% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 11.3% over the next 12 months, similar to its two-year rate. This projection is admirable and suggests its newer products and services will spur better top-line performance.

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Operating Margin

Dycom was profitable over the last five years but held back by its large cost base. Its average operating margin of 6.2% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.

On the plus side, Dycom’s operating margin rose by 5.1 percentage points over the last five years, as its sales growth gave it immense operating leverage.

This quarter, Dycom generated an operating profit margin of 11.4%, up 4.3 percentage points year on year. The increase was encouraging, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Dycom’s EPS grew at an astounding 27.2% compounded annual growth rate over the last five years, higher than its 7.7% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Dycom’s earnings quality to better understand the drivers of its performance. As we mentioned earlier, Dycom’s operating margin expanded by 5.1 percentage points over the last five years. On top of that, its share count shrank by 7.4%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Dycom, its two-year annual EPS growth of 16.4% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q1, Dycom reported EPS at $2.09, down from $2.12 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. Over the next 12 months, Wall Street expects Dycom’s full-year EPS of $7.89 to grow 22.3%.

Key Takeaways from Dycom’s Q1 Results

We were impressed by how significantly Dycom blew past analysts’ EPS expectations this quarter. We were also excited its EBITDA outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this quarter featured some important positives. The stock traded up 6.1% to $205.15 immediately after reporting.

Dycom put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.