Dycom Industries Inc (DY)

[bradford86]

Dycom
Dycom stock price chart
Dycom stock price chart (finviz)

Dycom is a pureplay telecom contractor. It's top 5 customers account for 2/3 of their total revenue. Dycom is forecasting $244M of EBITDA for 2022 and has a backlog of $5.5B, of which $2.9B is expected to be completed in the next 12 months. This puts Dycom's EV/EBITDA at around 11.7x. I think Dycom is worth $115+ and currently trades at $100. Dycom generated 21% organic revenue growth last quarter and industry tailwinds are starting to take root. AT&T is finally expanding their networks:

Dycom (DY), an installer of fiber-optic wiring, is expected to get a boost as AT&T (T) and other phone companies finally expand their fiber-optic broadband networks. In addition, new government subsidies will expand broadband networks in rural areas.

The company is repurchasing stock and is expecting to increase their margins moving forward despite inflation and a tight labor market.

Margin Expansion
Dycom expects that its margins will expand to north of 10% as the 5G rollout takes shape and the cycle gets underway. Dycom has a significant opportunity in rural utility moving forward as they undertake broadband initiatives. Dycom has been targeting longer-duration contracts where they can ensure that their labor costs are economical.

https://seekingalpha.com/article/4527107-5g-rollout-underway-qualtek-most-potential-upside