Why Dycom Shares Popped

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 telecom contractor Dycom Industries climbed 11% today after its quarterly results and outlook topped Wall Street expectations.

So what: Dycom's third-quarter profit sank 25% on lower asset sales, but continued top-line growth -- contract revenue soared 38% -- coupled with upbeat guidance for the current quarter suggests that demand remains robust. In fact, organic revenue for the period increased 6.2% over the prior-year period, reinforcing recent optimism over management's ability to grow efficiently.

Now what: For the current quarter, management now sees EPS of $0.40-$0.47 on revenue of $455 million-$475 million, versus Wall Street's view of $0.38 and $441 million. "Continued total and organic revenue growth as services to wireless carriers remain robust, cable construction strengthens and customers maintain growing expenditures," the company wrote in a presentation to analysts. With the stock busting through its 52-week high today and trading at a 20-plus P/E, however, I'd wait for some of the excitement to fade before buying into that bullishness.

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The article Why Dycom Shares Popped originally appeared on Fool.com.

Motley Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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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