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

Core Insights - Dycom Industries, Inc. (DY) is benefiting from improved execution in fiber-to-the-home, hyperscaler-driven fiber builds, wireless programs, and service and maintenance work, supported by strong public infrastructure funding and optimism surrounding the Broadband Equity, Access and Deployment (BEAD) program [1][4] - The company's contract revenues increased by 13% year over year to $4.09 billion during the first nine months of fiscal 2026, with adjusted EBITDA margin rising by 140 basis points to 14.1% [1][8] - Dycom's days sales outstanding (DSO) improved to 105 days, a 14-day year-over-year reduction, indicating better project management and billing discipline [2][8] - The company has a backlog of $8.22 billion, with nearly $5 billion expected to convert within the next 12 months, allowing for more efficient planning of labor and equipment [3][8] - Earnings estimates for fiscal 2026 and fiscal 2027 have trended upward, indicating expected year-over-year growth of 26.9% and 35%, respectively [5][6] Market Performance - Dycom's shares have increased by 42.3% over the past six months, outperforming the Zacks Building Products - Heavy Construction industry, the broader Construction sector, and the S&P 500 Index [7] - The stock is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 24.65, which is a premium compared to industry peers [11][13] Competitive Landscape - Other market players such as Quanta Services, Inc. (PWR) and Primoris Services Corp. (PRIM) present substantial competition in the public infrastructure market, particularly in telecommunications and power infrastructure projects [10]