With A -28.69% Earnings Drop, Is Dycom Industries Inc’s (NYSE:DY) A Concern?
Assessing Dycom Industries Inc’s (NYSE:DY) performance as a company requires looking at more than just a years’ earnings data. Below, I will run you through a simple sense check to build perspective on how Dycom Industries is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its construction industry peers. Check out our latest analysis for Dycom Industries
Was DY’s recent earnings decline indicative of a tough track record?
DY’s trailing twelve-month earnings (from 28 April 2018) of US$116.11m has declined by -28.69% compared to the previous year. Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 28.35%, indicating the rate at which DY is growing has slowed down. What could be happening here? Well, let’s take a look at what’s going on with margins and if the whole industry is feeling the heat.
Over the last few years, revenue growth has been lagging behind which implies that Dycom Industries’s bottom line has been driven by unmaintainable cost-reductions. Scanning growth from a sector-level, the US construction industry has been growing its average earnings by double-digit 14.74% in the prior twelve months, and a more subdued 8.10% over the previous five years. This suggests that any tailwind the industry is benefiting from, Dycom Industries has not been able to gain as much as its industry peers.
In terms of returns from investment, Dycom Industries has not invested its equity funds well, leading to a 15.54% return on equity (ROE), below the sensible minimum of 20%. However, its return on assets (ROA) of 8.29% exceeds the US Construction industry of 3.82%, indicating Dycom Industries has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Dycom Industries’s debt level, has declined over the past 3 years from 9.80% to 2.33%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have unpredictable earnings, can have many factors influencing its business. You should continue to research Dycom Industries to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for DY’s future growth? Take a look at our free research report of analyst consensus for DY’s outlook.
Financial Health: Is DY’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 28 April 2018. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
