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Smaller Industrials Names Seeing Surging Growth: Here's WhyDycom Industries NYSE: DY Chief Executive Officer Dan Peyovich said the company is seeing broad-based demand across fiber, long-haul networks and data center-related services, arguing that the company’s recent backlog growth reflects more than a short-term cyclical upturn.

Speaking with Guggenheim Securities analyst Joe Osha during a company discussion, Peyovich said Dycom’s nearly $12 billion in quarterly backlog reflects multiple demand drivers “coming in now on top of each other” and the company’s ability to supply a large skilled workforce. He said Dycom has more than 20,000 employees across the country and that customers need that workforce to execute ambitious build programs.

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Hidden Gems: 3 Quiet Stocks With Loud Potential“We think that this has a ton of staying power,” Peyovich said. “These build cycles go well into the next decade.”

Long-Haul and Middle-Mile Opportunity Expands Peyovich said Dycom had previously sized the long-haul and middle-mile opportunity at $20 billion over five years, but said that figure has “grown considerably” as customers plan new routes and higher-capacity networks to support data centers and other connectivity needs.

The Top 5 Analysts Ranked by MarketBeat and Stocks They CoverHe said older networks lack the necessary capacity and routes for current and future demand, while customers and hyperscalers are increasingly discussing larger fiber counts. Peyovich said 864-count fiber has become more common, 1,728-count fiber is also common, and some customers are discussing routes with 7,500 to 10,000 fiber counts.

He also emphasized that the opportunity is not only about fiber count, but also route redundancy. That redundancy may include additional conduit in the same trench, a separate trench on the other side of the road or a different route altogether.

Peyovich said the long-haul and middle-mile build cycle remains “extremely early,” with the vast majority of the opportunity still ahead. He said Dycom is already seeing meaningful revenue contributions and backlog from the category, but expects activity to ramp next year and become more significant by calendar 2028.

BEAD Expected to Take Shape in 2027 On the federal Broadband Equity, Access and Deployment program, Peyovich said Dycom still expects some revenue contribution this year, but described it as upside because approvals and permitting are taking longer than expected.

He said calendar 2027 remains the period when BEAD should “really start to take shape.” Dycom estimates its addressable market from the program at about $17 billion, excluding materials and focusing only on work Dycom can perform. Peyovich said that figure could ultimately be higher and the program could last longer than the currently expected four-year delivery period.

Dycom previously discussed about $500 million of verbal BEAD awards, and Peyovich said that amount has grown. However, he said some awards have not yet moved into contracted backlog because they still need final approvals and must pass through customers’ internal systems.

Peyovich said Dycom will not pursue BEAD work at any price. If competitors bid aggressively at low pricing, he said Dycom will focus on opportunities that provide good returns on people and capital.

Starlink Seen as Limited Threat to Fiber Builds Asked about Starlink and low-Earth orbit satellite broadband, Peyovich said Dycom’s role is tied to growing data consumption and the need for infrastructure to move that data. Even satellite-based services require terrestrial connectivity, he said.

On fiber-to-the-home, Peyovich pointed to BEAD as the most relevant test case because it targets lower-density and harder-to-serve areas. He said low-Earth orbit providers took about 23% to 25% of that opportunity, which he described as a best-case scenario for the technology. He said Dycom does not expect the same level of impact in metropolitan markets.

Peyovich also said fiber-to-the-home programs have significant momentum, with more than 10 million passings completed annually. He said speed matters because the first fiber connection in a market tends to achieve the best penetration, and consumers have shown a preference for fiber’s high capacity and low latency.

Data Center Demand Supports Communications and Power Solutions Peyovich said data center growth is creating opportunities for Dycom both outside and inside data center facilities. On the communications side, he said new and expanding data center markets need to be connected back to long-haul networks, increasing demand for Dycom’s services.

He also highlighted opportunities to connect Dycom’s communications work with its Building Systems segment, including fiber opportunities “inside the fence” at data center sites.

Dycom’s Power Solutions business remains heavily tied to data centers, Peyovich said, with more than 90% of that business in the data center space and the DMV market. He said demand remains “absolutely insatiable,” and Dycom has had to turn away opportunities despite raising the growth outlook for the business to 35%.

Peyovich said Dycom is also seeking additional acquisition opportunities following its acquisitions of Power Solutions and NTI. He said the company is interested in expanding capabilities such as structured cabling and electrical work, while remaining disciplined on deal selection.

Capital Allocation Focuses on Growth and Acquisitions Peyovich said Dycom’s first capital allocation priority is investment in organic growth. After that, he said mergers and acquisitions are the current priority, given the opportunities the company sees. He noted Dycom bought back shares last quarter when it viewed the share price as dislocated, but said M&A is the larger focus today.

He said Dycom’s long-term net leverage target remains around two times, though the company could consider moving toward three times for the right acquisition if it believed leverage could be reduced quickly afterward.

Peyovich repeatedly pointed to Dycom’s skilled workforce as a competitive differentiator. He said the company can train someone with no experience in communications to become a contributor within about six months, while union electrical roles require a longer apprenticeship process. He said the company has invested in benefits, training and a flagship training facility to attract and retain workers.

Looking ahead, Peyovich said Dycom is positioned to benefit from ongoing growth in data consumption, communications infrastructure and Building Systems demand. He said the company aims to continue growing and diversifying, both organically and through acquisitions, while maintaining discipline.

About Dycom Industries NYSE: DYDycom Industries, Inc NYSE: DY is a leading provider of specialty contracting services to the telecommunications industry in North America. The company delivers engineering, construction, installation and maintenance solutions for communications infrastructure, supporting a broad range of network technologies and system architectures. Dycom's services span outside plant construction, cable placement, fiber optic deployment, wireless and wireline network engineering, as well as testing and turn-up services for voice, data and video applications.

Dycom's customer base includes major telecommunications carriers, cable operators, utility companies and competitive local exchange carriers.

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Key Takeaways Dycom raised fiscal 2027 guidance after a record backlog and strong demand for AI and digital infrastructure.DY expanded margins through disciplined execution, favorable project mix and growth in Building Systems.Dycom is boosting long-term growth through acquisitions, workforce investment and digital infrastructure. Dycom Industries, Inc. (DY - Free Report) is currently trading below the Zacks Building Products - Heavy Construction industry, with a forward 12-month price-to-earnings (P/E) ratio of 24.08, but above the broader Zacks Construction sector. The industry’s average currently is 25.48, while the sector’s valuation is 21.59.

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Despite trading at a discounted valuation relative to its long-term growth prospects, Dycom is benefiting from powerful secular trends, including accelerating AI-driven data center construction, cloud infrastructure expansion, fiber-to-the-home deployments, wireless network upgrades and government-funded broadband programs.

These demand drivers have fueled a record backlog and prompted management to raise its fiscal 2027 outlook, providing strong multi-year revenue visibility. Supported by expanding margins, strategic acquisitions and growing exposure to high-value digital infrastructure projects, the company's current valuation appears attractive for investors seeking long-term growth.

Shares of this specialty contracting firm, operating in the telecom industry, have gained 13.1% in the past three months, outperforming the industry, the sector and the S&P 500 Index. Notably, during the same time frame, DY has outrun a few of the notable peers, including MasTec, Inc. (MTZ - Free Report) , EMCOR Group, Inc. (EME - Free Report) and Jacobs Solutions, Inc. (J - Free Report) . The price performances can be observed in detail in the chart given below, wherein MasTec is seen with a gain of 9.3%, while EMCOR and Jacobs tumbled 0.2% and 1.6%, respectively.

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Let’s decode the factors backing Dycom stock’s growth prospects in the upcoming period.

AI-Driven Digital Infrastructure Demand TrendsDycom is benefiting from unprecedented investment in AI-driven digital infrastructure, creating a favorable long-term demand environment. Explosive growth in cloud computing, Artificial Intelligence workloads and hyperscale data centers is driving the need for fiber infrastructure, inside-the-fence connectivity, electrical systems and long-haul network deployments. At the same time, fiber-to-the-home expansion, wireless network modernization and government broadband initiatives continue to provide multiple growth avenues.

These favorable trends translated into a record first-quarter fiscal 2027 backlog of $11.9 billion, up 46.5% year over year, with a robust 2.2x book-to-bill ratio, providing strong revenue visibility. Customers are also extending contract durations to secure DY’s skilled workforce for multi-year projects, strengthening backlog quality and positioning it to capitalize on sustained digital infrastructure spending for years ahead. These market tailwinds not only support Dycom but also its close peers, including MasTec, EMCOR and Jacobs.

Margin Expansion & Improving Profitability OutlookDycom continues to demonstrate meaningful profitability improvement through disciplined execution, operating leverage and a favorable project mix. First-quarter fiscal 2027 adjusted EBITDA margin expanded 141 basis points (bps) year over year to 13.4%, while the Communications segment delivered a 31-bps margin expansion despite continued investments in workforce expansion and geographic growth. Meanwhile, the Building Systems segment significantly outperformed expectations, generating an impressive 17.7% adjusted EBITDA margin as Power Solutions ramped faster than anticipated.

Management expects profitability to improve further throughout fiscal 2027, with modest margin expansion in Communications driven by operating leverage and sustained high-teen margins in Building Systems. Continued scaling of data center projects, productivity improvements, disciplined project selection, successful integration of acquisitions and expanding higher-value digital infrastructure work are expected to support ongoing earnings growth.

Raised Fiscal 2027 Outlook Signals Sustained GrowthFollowing a record first quarter of fiscal 2027 that exceeded expectations, Dycom raised its fiscal 2027 outlook, reflecting confidence in both execution and end-market demand. The company now expects total contract revenues between $7.38 billion and $7.65 billion (from $6.85-$7.15 billion), driven by continued strength across Communications and Building Systems segments. Communications segment’s revenues are projected at $6.03-$6.20 billion, while the Building Systems segment is expected to contribute $1.35-$1.45 billion, excluding the pending National Technology Integrators acquisition.

For the second quarter of fiscal 2027, management forecasts revenues of $1.94-$2.01 billion (up from $1.378 billion reported a year ago), adjusted EBITDA of $284-$303 million (up from $205.5 million reported a year ago) and adjusted EPS of $4.40-$4.82 (up from $3.33 reported a year ago). Strong customer commitments, expanding fiber deployments, accelerating data center activity and improving margins support management's increasingly optimistic growth expectations.

Disciplined Capital AllocationDycom's balanced capital allocation strategy combines organic investments, strategic acquisitions and shareholder returns to strengthen its competitive position. The company continues investing in workforce development, fleet expansion, technology and operational capabilities while pursuing acquisitions that enhance technical expertise and broaden customer relationships.

The successful acquisition of Power Solutions has expanded Dycom's exposure to the rapidly growing data center electrical contracting market, while the pending acquisition of National Technology Integrators further extends its capabilities into structured cabling, security systems and end-to-end digital infrastructure. These acquisitions create meaningful cross-selling opportunities across communications and building systems, enhancing long-term growth potential. Supported by healthy liquidity, manageable leverage and record backlog, DY remains well-positioned to pursue additional accretive acquisitions while capitalizing on accelerating AI, cloud and broadband infrastructure investments.

Earnings Estimate Trend Favors DycomDycom’s earnings estimates for fiscal 2027 and fiscal 2028 have trended upward over the past 30 days to $16.35 per share and $19.95 per share, respectively. The estimated figures for fiscal 2027 and fiscal 2028 imply year-over-year growth of 36.6% and 22%, respectively.

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DY’s ROE PositionDycom’s superior return on equity (ROE) indicates its growth potential. It provides solid investment returns relative to the industry average, as reflected in its current trailing 12-month ROE of 24.13%. This compares favorably with the industry's ROE of 22.65%. The factor mentioned above indicates the company’s efficiency in using its shareholders’ funds, along with its ability to generate profit with minimum capital usage.

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Should You Invest in DY Stock Now?Dycom stock continues to trade below the industry’s valuation while benefiting from powerful secular growth drivers, including AI-driven data center expansion, fiber-to-the-home deployments, cloud infrastructure investments and government-backed broadband programs. Record backlog, strategic acquisitions and raised fiscal 2027 guidance provide strong revenue visibility, while margin expansion and disciplined execution are expected to drive sustained earnings growth.

Moreover, upward revisions to fiscal 2027 and 2028 earnings estimates, coupled with an industry-leading return on equity, reinforce confidence in the company’s growth trajectory. Although macroeconomic uncertainty and execution risks remain, Dycom’s discounted valuation relative to its long-term prospects offers an attractive risk-reward profile.

Thus, backed by a Zacks Rank #1 (Strong Buy) currently, DY stock remains a compelling buy at current levels rather than waiting for a better entry point. You can see the complete list of today’s Zacks #1 Rank stocks here.

A month has gone by since the last earnings report for Dycom Industries (DY - Free Report) . Shares have lost about 7.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Dycom Industries due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Dycom Q1 Earnings & Revenues Top, Raises FY2027 OutlookDycom Industries reported stellar results for the first quarter of fiscal 2027 (ended May 2, 2026). Adjusted earnings and contract revenues surpassed the Zacks Consensus Estimate and grew year over year.

Q1 Earnings & Revenue DiscussionDycom reported adjusted earnings per share (EPS) of $4.42, which topped the Zacks Consensus Estimate of $2.73 by 61.9%. In the year-ago quarter, it reported an adjusted EPS of $2.39.

Contract revenues of $1.96 billion surpassed the consensus mark of $1.67 billion by 18.0% and grew 56.1% year over year. The metric rose 24.7% on an organic basis.

Management noted that demand for fiber infrastructure deployments and data center builds remained robust during the quarter. Power Solutions also outperformed in its first full quarter as part of the Building Systems segment.

Operations & Backlog DetailsAdjusted EBITDA increased 74.6% to $262.5 million from a year ago. Adjusted EBITDA margin of 13.4% expanded 141 basis points (bps) from the year-ago level.

Dycom’s backlog as of the first fiscal quarter totaled $11.91 billion, up 46.5% year over year from $8.13 billion. Of the current backlog position, $6.40 billion is projected to be completed in the next 12 months.

Segmental DetailsBeginning in the fourth quarter of fiscal 2026, Dycom reports results through two reportable segments: Communications and Building Systems.

Communications: This segment’s contract revenues increased 24.7% year over year to $1.57 billion. Growth was driven by expansion into additional geographies and fiber-to-the-home builds that ramped ahead of expectations, supported by favorable seasonal conditions. Adjusted EBITDA increased to $192.4 million from $150.4 million a year ago. Adjusted EBITDA margin of 12.3% expanded 31 bps from the year-ago level. This segment’s total backlog grew to $10.80 billion from $8.13 billion a year ago, with a 12-month backlog of $5.38 billion.

Building Systems: The segment generated contract revenues of $395.4 million. Adjusted EBITDA was $70.0 million and adjusted EBITDA margin was 17.7%. Total backlog stood at $1.11 billion, with a 12-month backlog of $1.02 billion. The segment benefited from strong execution and demand that exceeded initial expectations.

Balance Sheet & Cash FlowAs of May 2, 2026, Dycom had cash and cash equivalents of $538.8 million compared with $709.2 million as of fiscal 2026-end. Long-term debt was $2.81 billion, relatively unchanged from $2.81 billion at fiscal 2026-end.

During the first fiscal quarter, DY repurchased 100,000 shares for $36 million.

Q2 GuidanceDycom expects contract revenues between $1.94 billion and $2.01 billion for the second quarter of fiscal 2027. Adjusted EBITDA is expected to be between $284 million and $303 million. The company anticipates adjusted EPS in the range of $4.40-$4.82.

Fiscal 2027 ViewBased on strong fiscal first-quarter results and expectations for the remainder of the year, Dycom raised its fiscal 2027 outlook. The company now expects contract revenues between $7.38 billion and $7.65 billion, up from its prior guided range of $6.85 billion to $7.15 billion. The updated outlook implies a 33.1-37.9% year-over-year rise and 12.6-15.8% organic growth.

The company continues to anticipate adjusted EBITDA margin expansion in fiscal 2027. In the Communications segment, Dycom expects modest adjusted EBITDA margin improvement as operating leverage offsets continued investment to support growth. In the Building Systems segment, the company now expects adjusted EBITDA margin in the high teens, an improvement from its earlier expectation of a mid-teen margin.

For fiscal 2027, Dycom expects Communications segment revenues between $6.03 billion and $6.20 billion, while Building Systems revenues are projected between $1.35 billion and $1.45 billion.

How Have Estimates Been Moving Since Then?Since the earnings release, investors have witnessed a upward trend in fresh estimates.

The consensus estimate has shifted 16.49% due to these changes.

VGM ScoresCurrently, Dycom Industries has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock has a score of D on the value side, putting it in the bottom 40% for value investors.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

OutlookEstimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Dycom Industries has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.