Dycom's (NYSE:DY) Q4 CY2025: Strong Sales

Telecommunications company Dycom (NYSE:DY) announced

in Q4 CY2025, with sales up 34.4% year on year to $1.46 billion. Guidance for next quarter’s revenue was optimistic at $1.68 billion at the midpoint, 2.3% above analysts’ estimates. Its non-GAAP profit of $2.03 per share was 14% above analysts’ consensus estimates.

Is now the time to buy Dycom?

“Our strong fourth quarter performance closed a record year for Dycom, with ramping organic growth, meaningful margin expansion and increased Free Cash Flow,” said Dan Peyovich, Dycom’s President and Chief Executive Officer.

Company Overview

Working alongside some of the most popular mobile carriers in the world, Dycom (NYSE:DY) builds and maintains telecommunications infrastructure.

Revenue Growth

A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Thankfully, Dycom’s 11.6% annualized revenue growth over the last five years was impressive. Its growth surpassed the average industrials company and shows its offerings resonate with customers, a great starting point for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Dycom’s annualized revenue growth of 15.2% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.

This quarter, Dycom reported wonderful year-on-year revenue growth of 34.4%, and its $1.46 billion of revenue exceeded Wall Street’s estimates by 6.9%. Company management is currently guiding for a 33.1% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 26% over the next 12 months, an improvement versus the last two years. This projection is eye-popping and indicates its newer products and services will catalyze better top-line performance.

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Operating Margin

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.

Dycom was profitable over the last five years but held back by its large cost base. Its average operating margin of 6.9% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.

On the plus side, Dycom’s operating margin rose by 6.6 percentage points over the last five years, as its sales growth gave it immense operating leverage.

This quarter, Dycom generated an operating margin profit margin of 9.4%, up 4.5 percentage points year on year. The increase was encouraging, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Dycom’s EPS grew at 33.7% compounded annual growth rate over the last five years, higher than its 11.6% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Dycom’s earnings quality to better understand the drivers of its performance. As we mentioned earlier, Dycom’s operating margin expanded by 6.6 percentage points over the last five years. On top of that, its share count shrank by 5.1%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Dycom, its two-year annual EPS growth of 21.1% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q4, Dycom reported adjusted EPS of $2.03, up from $1.17 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Dycom’s full-year EPS of $10.82 to grow 32.3%.

Key Takeaways from Dycom’s Q4 Results

We were impressed by how significantly Dycom blew past analysts’ revenue expectations this quarter. We were also glad its EBITDA outperformed Wall Street’s estimates. On the other hand, its EBITDA guidance for next quarter missed. Zooming out, we think this was a solid print. The stock traded up 3.1% to $415.89 immediately after reporting.

Dycom had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy.