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Will Project-Related Delays Impact Dycom's (DY) Q2 Earnings?

Dycom Industries, Inc. DY is scheduled to report second-quarter fiscal 2021 results on Aug 26, before the opening bell.

In the last reported quarter, its adjusted earnings and revenues significantly topped the Zacks Consensus Estimate but declined 32.1% and 2.3%, respectively, on a year-over-year basis. Dycom has been facing issues regarding a large customer program. A slow start at a specific customer’s rollout of its new system weighed on the company’s year-over-year earnings performance.

This specialty contracting services provider — which shares space in the Building Products - Heavy Construction industry with EMCOR Group, Inc. EME, MasTec, Inc. MTZ and North American Construction Group Ltd. NOA — surpassed earnings estimates in four of the trailing five quarters.

Earnings & Revenue Expectations

The Zacks Consensus Estimate for Dycom’s fiscal second-quarter bottom line has remained stable at 69 cents per share over the past 60 days. The bottom-line estimate indicates a 36.7% decline on a year-over-year basis. The consensus estimate for revenues is $840.46 million, indicating 5% year-over-year fall.

Dycom Industries, Inc. Price and EPS Surprise

Dycom Industries, Inc. price-eps-surprise | Dycom Industries, Inc. Quote

Factors to Note

Dycom’s revenues and earnings are expected to have declined in the fiscal second quarter due to persistently lower activity levels due to challenging market conditions, project delays, as well as uncertain customer plans. Also, challenges surrounding a large customer program and a slow start with a specific customer in rolling out its new system may have added to woes.

Although the majority of the company’s work has been deemed essential, especially telecommunication networks that are crucial infrastructure for the country, Dycom anticipates fiscal second quarter revenues within low single-digit decrease to low single-digit increase.

The consensus mark for telecommunications revenues is currently pegged at $760 million, indicating a 5.8% decline from the year-ago period. The same for Underground facility locating revenues is $53 million, implying 1.5% year-over-year fall.

The consensus estimate for backlog is currently pegged at $6.466 billion, suggesting a 3.4% decrease from $6.691 billion a year ago. The decline in backlog probably reflects customers’ reprioritization of the components of a large program.

The company pointed out that although major customers have stepped up infrastructure spending, higher-than-expected costs of a large customer program have been denting margins.

What the Zacks Model Says

Our proven model does not conclusively predict an earnings beat for Dycom this time around. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to deliver a positive surprise. This is not the case here, as you will see below.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Dycom currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

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