Dycom Stock Soars 40% in 3 Months: Buy the Surge Now or Wait?

Core Insights - Dycom Industries, Inc. (DY) has experienced a 39.6% increase in stock price over the past three months, outperforming the Zacks Building Products - Heavy Construction industry, the broader Construction sector, and the S&P 500 Index [1] Demand Drivers - The company is benefiting from strong demand for fiber and digital infrastructure, driven by increased data center projects and the Broadband Equity, Access and Deployment (BEAD) program [2][4] - Dycom is positioned to capitalize on the early stages of a generational deployment of digital infrastructure, with significant growth expected in the construction of new outside plant data center networks starting in 2026 [5] Financial Performance - For the first nine months of fiscal 2026, Dycom's contract revenues grew 13% year-over-year to $4.09 billion, supported by robust demand for telecommunications and digital infrastructure [5] - The total backlog as of October 2025 increased by 4.7% year-over-year to $8.22 billion, with the next 12-month backlog rising 11.4% [8] BEAD Program Impact - The BEAD program is expected to provide a multiyear catalyst with $29.5 billion in anticipated state and territory spending, of which approximately $26 billion is directed toward fiber or HFC infrastructure [9] - Dycom has secured over $500 million in verbal BEAD-related awards, indicating potential for substantial revenue growth as these awards convert to contracts [10] Strategic Acquisitions - Dycom's growth strategy includes targeted acquisitions, such as the acquisition of Power Solutions, which enhances its capabilities in electrical infrastructure solutions and strengthens ties with hyperscalers [11] - The acquisition of Black & Veatch's public-carrier wireless infrastructure business has expanded Dycom's wireless construction capabilities and is expected to contribute significantly to revenues [12] Future Outlook - Dycom anticipates contract revenues for the fiscal fourth quarter to be between $1.26 billion and $1.34 billion, reflecting growth from $1.085 billion in the prior year [13] - For fiscal 2026, total contract revenues are expected to range from $5.350 billion to $5.425 billion, representing a year-over-year increase of 13.8% to 15.4% [14] Earnings Estimates - Earnings estimates for fiscal 2026 and fiscal 2027 have trended upward, indicating year-over-year growth of 25.2% and 42.3%, respectively [15] - Dycom's trailing 12-month return on equity (ROE) stands at 22.2%, surpassing the industry average, highlighting its efficiency in generating shareholder returns [18] Valuation and Market Position - Dycom stock is currently trading at a premium with a forward 12-month price-to-earnings (P/E) ratio of 24.46, reflecting strong market fundamentals [19] - Analysts have a "Strong Buy" recommendation for Dycom, indicating positive sentiment towards the stock [25]