Why Dycom Stock Just Died

MarketsMotley Fool

What happened

Shares of telecommunications infrastructure provider Dycom (NYSE: DY) stock are diving -- down 16% as of 10:35 a.m. EDT after reporting a swing and a miss on both sales and earnings for its fiscal Q1 2019. (And no that's not a typo. Dycom is about a year ahead of everyone else when it comes to its fiscal calendar).

Continue Reading Below

Looking to report Q1 sales of $736.1 million, Dycom delivered $731.4 million this morning instead. Expected to report a pro forma profit of at least $0.68 per share, Dycom said its adjusted earnings were only $0.63 -- and its GAAP profit a mere $0.53 per share.

So what

Sales declined 7% year over year in Q1, and organic sales "growth" was negative 10%. (Revenues from "storm restoration services" and "contract revenues from acquired businesses" helped to minimize the decline in organic sales).

Diluted earnings per share, meanwhile, declined a much steeper 57% year over year, falling to the aforementioned $0.53 per share.

Now what

Still, Dycom remains profitable, and its guidance for the rest of this year suggests that's not going to change in the near term -- if not quite so profitable as investors had hoped. For fiscal Q2 2019 (that's the quarter we are in now), Dycom says it expects to earn between $1.02 and $1.17 per share, GAAP, on sales of between $830 million and $860 million. For the full year, Dycom's guidance calls for $3.81 to $4.70 per share in profit on sales between $3.23 billion to $3.42 billion.

These numbers are below what Dycom had previously promised, however, and below Wall Street's expectations. The full year guidance, for example, is roughly $1 below previous guidance, and a full $1 below what Wall Street had been telling investors to expect.

Hence the sell-off.

10 stocks we like better than Dycom IndustriesWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Dycom Industries wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of May 8, 2018

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.