The share price of the 47-year-old Palm Beach, FL telecommunications contractor have been exploding since Wednesday when the generally under-the-radar company reported fiscal third quarter revenues of $664.6 million, far ahead of analysts’ estimates of about $598 million. It was especially good news since Dycom (NYSE: DY) had missed Wall Street expectations last time it reported, this time posting adjusted earnings per share of $1.08. That beat consensus estimates from Zacks Investment Research by a whopping 44 percent, an almost unheard of feat.
At the same time, the company announced that it had gotten an expanded credit agreement taking it up by $200 million to $350 million, increasing its credit capacity to $800 million, or as Wells Fargo pointed out in an investors’ note, $350 million as a term loan and $450 million revolver.
“Bottom Line,” Wells Fargo’s telecom team said, “DY significantly exceeded our expectations with the FQ3 print, followed by a 12 percent stock price jump in after-hours trading. We had forecast an organic growth rate of 20.5 percent (excluding an estimated $20 million in acquired business revenue) and DY exceeded that by 800 basis points, generating $40 million more organically than we had forecast. We would also note the significant increase in EBITDA margins, which must indicate that DY fully absorbed the cost pressures that impacted its FQ2 margins. We think this beat is a clear indication that its top customers are significantly accelerating their fiber deployments and that DY is capturing the largest market share in servicing these projects.”
Investors tend to “sit up and take notice” when a stock rallies 12% on good earnings, TheStreet’s Jim Cramer, gushed on CNBC’s “Mad Dash” segment Wednesday evening.
He suggested the company’s good results bode well for carrier AT&T (NYSE: T) . “AT&T is doing very well,” Cramer, said, “maybe better than we think.” Cramer hinted that Dycom wouldn’t have had such a great quarter except that “AT&T is its largest customer.”
Shares of Dycom Industries, Inc. closed yesterday at $85.12, up $2.78 or 3.38 percent.