Dycom's Billion-Dollar Buy Signals Huge Push Into Data-Center Growth

Dycom Industries, Inc. (NYSE:DY) shares surged after the company posted record third-quarter results, raised its outlook, and disclosed a major acquisition.

Earnings Details

Contract revenues were up 14.1% year over year (Y/Y) to $1.45 billion, beating the analyst estimates of $1.41 billion.

Organic revenue grew 7.2%, while contract revenues from acquired businesses rose to $110.9 million from $21.0 million in the prior-year quarter.

Adjusted EBITDA rose 28.5% Y/Y to $219.4 million, or 15.1% of contract revenues.

Adjusted EPS of $3.63 beat analyst estimates of $3.20.

Operating cash flow for the quarter was $220 million. The company ended the quarter with a backlog of $8.2 billion and cash and equivalents of $110.1 million.

Management Commentary

“The demand drivers for telecommunications and digital infrastructure have never been stronger, fueled by accelerating fiber builds, a massive ramp-up in data center needs, and the much anticipated arrival of BEAD,” CEO Dan Peyovich said.

Outlook

For the fourth quarter, Dycom expects adjusted EPS of $1.62-$1.97, versus the consensus of $1.59, and sales of $1.26 billion-$1.34 billion, compared with the $1.293 billion consensus.

The company raised its fiscal 2026 sales guidance to $5.35 billion–$5.425 billion, from $5.29 billion–$5.425 billion earlier, versus the consensus of $5.348 billion.

Dycom now expects fiscal 2026 contract revenues to be in the $5.35 billion to $5.425 billion range, reflecting 13.8% to 15.4% growth.

Power Solutions Acquisition

In a separate release, Dycom disclosed that it has entered a definitive agreement to acquire Power Solutions in a deal valued at $1.95 billion. The transaction, subject to standard closing conditions, is expected to finalize before the end of the fiscal year.

The deal is expected to immediately boost Dycom’s adjusted EBITDA margin and adjusted EPS, excluding non-cash intangible asset amortization, while also enhancing free cash flow for the combined company.

Also, Power Solutions is projected to generate around $1.0 billion in revenue for 2025.

Peyovich added, “Our customers will benefit from our expanded capabilities to support data center development by combining Dycom’s expertise in fiber and Power Solutions’ leadership in electrical, two of the most critical elements in digital infrastructure.”

Power Solutions is an electrical contractor in the Mid-Atlantic U.S. that works with major general contractors to build and maintain electrical systems for data centers, hospitals, laboratories, telecom facilities, and government and military sites.

Price Action: DY shares were trading higher by 15.33% to $341.60 at last check Wednesday.

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