Why Dycom Industries' Shares Dropped


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of specialty contractor Dycom Industries (NYS: DY) fell as much as 19% today after announcing results that disappointed investors.

So what: Contract revenue rose 4.7% to $318.0 million and net income rose a smidge to $13.3 million, or $0.39 per share. But analysts had expected $323.7 million in revenue and earnings per share of $0.41.

To make matters worse, management said that revenue would be down slightly in the next few quarters and analysts had expected a nice increase.

Now what: The earnings miss is concerning, but I would focus more on the anticipated decline in revenue as the big red flag. Shares are currently trading at just under 14 times trailing earnings, and if revenue and profit decline over the next year, the stock will only become more expensive on that basis. I would take a wait-and-see approach with this stock, looking for an uptick in results before jumping in.

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The article Why Dycom Industries' Shares Dropped originally appeared on Fool.com.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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