Wall Street Watch Wednesday: Dycom Earnings a Bad Sign for the Telecom Biz
Dycom Industries (DY) had a pretty neat streak going until Tuesday night.
The provider of construction and specialty services for the telecommunications industry had posted better than expected earnings for five consecutive quarters.
Hopefully, that streak will get going again next quarter.
Dycom posted disappointing financial results after Tuesday's market close. Contract revenues climbed 5% to $318 million, just shy of the $323.7 million that Wall Street was expecting. Dycom's quarterly profit of $0.39 a share may be just ahead of the $0.38 a share it posted during last year's fiscal fourth quarter, but analysts were holding out for net income of $0.41 a share.
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Dycom may not be a household name, but the company booked $1.2 billion in contract revenue in its recently concluded fiscal year. The company offers engineering, construction, maintenance, and installation services to telephone companies, cable providers, and utility companies through the United States and Canada.
The company's heavy lifting work behind the scenes is why the miss on both ends of the income statement is so problematic. If Dycom isn't doing as well as the market was expecting, it's a safe bet that its customers are also smarting.
Other Things Worth Watching
• Are blue chips and tech stocks diverging? For the second day in a row this trading week, the Dow and the S&P 500 declined but the tech-heavy NASDAQ managed a small gain. The chances of the scenario playing out yet again on Wednesday are slim, but tech stocks have been leading the market higher during the latter part of summer. Apple (AAPL) hitting a new all-time high on Monday seems to have set a good example.
• Movado (MOV) barreled toward new all-time highs on Tuesday after the high-end watchmaker posted blowout quarterly results. Movado is also raising its near-term profit outlook. This is definitely a surprise. Who is buying watches in this booming smartphone age? A lot of people, apparently. Trendy watchmaker Fossil (FOSL) also posted better than expected quarterly financials earlier this summer.
Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Movado Group, Apple, and Fossil. Motley Fool newsletter services have recommended buying shares of Fossil and Apple. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. Motley Fool newsletter services have recommended shorting Fossil.
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