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Dycom Industries, Inc. Just Missed EPS By 10%: Here's What Analysts Think Will Happen Next

Shareholders in Dycom Industries, Inc. (NYSE:DY) had a terrible week, as shares crashed 29% to US$32.04 in the week since its latest full-year results. Revenues were in line with forecasts, at US$3.3b, although statutory earnings per share came in 10% below what analysts expected, at US$1.80 per share. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on Dycom Industries after the latest results.

View our latest analysis for Dycom Industries

NYSE:DY Past and Future Earnings, February 28th 2020
NYSE:DY Past and Future Earnings, February 28th 2020

Taking into account the latest results, Dycom Industries's seven analysts currently expect revenues in 2021 to be US$3.32b, approximately in line with the last 12 months. Statutory earnings per share are forecast to plunge 29% to US$1.29 in the same period. In the lead-up to this report, analysts had been modelling revenues of US$3.43b and earnings per share (EPS) of US$2.46 in 2021. From this we can that analyst sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a large cut to earnings per share estimates.

It'll come as no surprise then, to learn that analysts have cut their price target 10% to US$52.38. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Dycom Industries, with the most bullish analyst valuing it at US$65.00 and the most bearish at US$38.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Dycom Industries shareholders.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that sales are expected to reverse, with the forecast 0.6% revenue decline a notable change from historical growth of 10% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 3.5% next year. It's pretty clear that Dycom Industries's revenues are expected to perform substantially worse than the wider market.

The Bottom Line

The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Dycom Industries. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider market. Analysts also downgraded their price target, suggesting that the latest news has led analysts to become more pessimistic about the intrinsic value of the business.

With that in mind, we wouldn't be too quick to come to a conclusion on Dycom Industries. Long-term earnings power is much more important than next year's profits. We have forecasts for Dycom Industries going out to 2022, and you can see them free on our platform here.

It might also be worth considering whether Dycom Industries's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.

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