Why Dycom (DY) Stock Is Up Today

Quality compounders are flywheels. Said differently, they’re businesses that generate heaps of profits and consistently reinvest them to produce even more profits. Rinse and repeat.

Companies such as these set the gold standard in public market investing. On that note, here are three quality compounders that could amplify your portfolio’s returns.

Sea (SE)

Market Cap: $82.43 billion

Founded in 2009 and a publicly traded company since 2017, Sea started as a gaming platform and has since expanded to offer a variety of services such as e-commerce, digital payments, and financial services across Southeast Asia.

Why Do We Love SE?

• Paying Users are rising, meaning the company can increase revenue without incurring additional customer acquisition costs if it can cross-sell additional products and features
• Incremental sales over the last three years have been highly profitable as its earnings per share increased by 42.6% annually, topping its revenue gains
• Free cash flow margin jumped by 36.3 percentage points over the last few years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends

TransDigm (TDG)

Market Cap: $78.02 billion

Supplying parts for nearly all aircraft currently in service, TransDigm develops and manufactures components and systems for military and commercial aviation.

Why Should You Buy TDG?

• Average organic revenue growth of 12% over the past two years demonstrates its ability to expand independently without relying on acquisitions
• Additional sales over the last two years increased its profitability as the 20.2% annual growth in its earnings per share outpaced its revenue
• Strong free cash flow margin of 19.6% enables it to reinvest or return capital consistently, and its recently improved profitability means it has even more resources to invest or distribute

TransDigm’s stock price of $1,389 implies a valuation ratio of 35.8x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.

Dycom (DY)

Market Cap: $10.27 billion

Working alongside some of the most popular mobile carriers in the world, Dycom builds and maintains telecommunications infrastructure.

Why Will DY Outperform?

• Annual revenue growth of 11.8% over the past two years was outstanding, reflecting market share gains this cycle
• Operating margin expanded by 5.9 percentage points over the last five years as it scaled and became more efficient
• Share repurchases have amplified shareholder returns as its annual earnings per share growth of 33.3% exceeded its revenue gains over the last five years

At $354.45 per share, Dycom trades at 28.7x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.

Dycom’s third quarter was marked by strong execution in core fiber-to-the-home programs and significant momentum in data center-related projects, leading to results above Wall Street’s expectations and a positive market reaction. Management pointed to robust activity from both traditional carriers and hyperscale technology providers, with CEO Dan Peyovich highlighting, “Our strong market position is validated by deepening engagement across our customer base.” Growth was also supported by recurring service and maintenance contracts, which have become a durable revenue stream.

Is now the time to buy DY? Find out in our full research report (it’s free for active Edge members).

Dycom (DY) Q3 CY2025 Highlights:

• Revenue: $1.45 billion vs analyst estimates of $1.41 billion (14.1% year-on-year growth, 3% beat)
• Adjusted EPS: $3.63 vs analyst estimates of $3.21 (13.1% beat)
• Adjusted EBITDA: $219.4 million vs analyst estimates of $205.6 million (15.1% margin, 6.7% beat)
• Revenue Guidance for Q4 CY2025 is $1.3 billion at the midpoint, roughly in line with what analysts were expecting
• Adjusted EPS guidance for Q4 CY2025 is $1.80 at the midpoint, above analyst estimates of $1.60
• EBITDA guidance for Q4 CY2025 is $147.5 million at the midpoint, above analyst estimates of $145.7 million
• Operating Margin: 10.4%, up from 8% in the same quarter last year
• Backlog: $8.2 billion at quarter end
• Market Capitalization: $10.09 billion

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Dycom’s Q3 Earnings Call

• Frank Louthan (Raymond James): Asked if improved DSOs represent a new normal. CEO Dan Peyovich said cash improvement was a priority, and while not always perfect, Dycom expects to maintain current levels going forward.
• Sangita Jain (KeyBanc): Sought details on Power Solutions’ customer overlap and BEAD funding timing. Peyovich explained most Power Solutions contracts are with general contractors serving hyperscalers, and BEAD revenue is expected to ramp in Q2 as awards convert to backlog.
• Alex Waters (Bank of America): Queried how additive Power Solutions is to Dycom’s $20 billion data center market opportunity and labor force integration. Peyovich emphasized the acquisition expands addressable markets and strengthens Dycom’s position with a larger skilled workforce.
• Richard Cho (JP Morgan): Questioned the wider Q4 revenue range and Power Solutions’ contract structure. Peyovich cited seasonality and fiber program ramp as drivers for the guidance range, and noted Power Solutions’ contracts are shorter-term, project-based, and less seasonal.
• Brent Thielman (D.A. Davidson): Asked about Power Solutions’ margin sustainability and potential revenue synergies from combined customer relationships. Peyovich said mid to high teens EBITDA margins are sustainable, and cross-selling should drive additional growth.

Catalysts in Upcoming Quarters

Looking ahead, the StockStory team will be monitoring (1) the successful integration and geographic expansion of Power Solutions, (2) the conversion of verbal BEAD awards into backlog as federal broadband funding is released, and (3) sustained growth in service and maintenance agreements, which underpin Dycom’s recurring revenue base. We will also keep a close eye on margin trends as the company scales its data center and fiber operations.

Dycom currently trades at $352.05, up from $296.20 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free for active Edge members).

The Best Stocks for High-Quality Investors

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

Stocks that have made our list include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return).

The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how engineering and design services stocks fared in Q3, starting with Dycom .

Companies providing engineering and design services boast ever-evolving technical expertise. Compared to their counterparts who manufacture and sell physical products, these companies can also pivot faster to more trending areas due to their smaller physical asset bases. Green energy and water conservation, for example, are current themes driving incremental demand in this space. On the other hand, those providing engineering and design services are at the whim of construction and infrastructure project volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates.

The 5 engineering and design services stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 2.6% while next quarter’s revenue guidance was 0.7% below.

Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 13.2% since the latest earnings results.

Dycom

Working alongside some of the most popular mobile carriers in the world, Dycom builds and maintains telecommunications infrastructure.

Dycom reported revenues of $1.45 billion, up 14.1% year on year. This print exceeded analysts’ expectations by 3%. Overall, it was an exceptional quarter for the company with a solid beat of analysts’ adjusted operating income estimates and an impressive beat of analysts’ EBITDA estimates.

“We delivered an exceptional third quarter with record revenue, profitability and backlog, reinforcing our industry leadership and operational discipline. As a result of our strong performance, we are increasing the midpoint of our full-year revenue outlook,” said Dan Peyovich, Dycom’s President and Chief Executive Officer.

Interestingly, the stock is up 10.2% since reporting and currently trades at $326.49.

We think Dycom is a good business, but is it a buy today? Read our full report here, it’s free for active Edge members.

Best Q3: Sterling

Involved in the construction of a major highway, the Grand Parkway in Houston, TX, Sterling Infrastructure provides civil infrastructure construction.

Sterling reported revenues of $689 million, up 16% year on year, outperforming analysts’ expectations by 11.3%. The business had an incredible quarter with a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ revenue estimates.

Sterling achieved the biggest analyst estimates beat and highest full-year guidance raise among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 19.5% since reporting. It currently trades at $316.05.

Is now the time to buy Sterling? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: AECOM

Founded in 1990 when a group of engineers from five companies decided to merge, AECOM provides various infrastructure consulting services.

AECOM reported revenues of $4.18 billion, up 1.6% year on year, falling short of analysts’ expectations by 3.3%. It was a slower quarter as it posted a significant miss of analysts’ revenue estimates and full-year EBITDA guidance slightly missing analysts’ expectations.

AECOM delivered the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 22% since the results and currently trades at $102.92.

Read our full analysis of AECOM’s results here.

EMCOR

Through its network of over 70 subsidiaries, EMCOR provides electrical, mechanical, and building construction and services

EMCOR reported revenues of $4.30 billion, up 16.4% year on year. This result met analysts’ expectations. More broadly, it was a mixed quarter as its performance in some other areas of the business was disappointing.

EMCOR had the weakest full-year guidance update among its peers. The stock is down 25.2% since reporting and currently trades at $581.36.

Read our full, actionable report on EMCOR here, it’s free for active Edge members.

MasTec

Involved in the 1996 Olympic Games MasTec is an infrastructure construction company that specializes in the telecommunications, energy, and utility industries.

MasTec reported revenues of $3.97 billion, up 22% year on year. This print topped analysts’ expectations by 1.6%. It was a strong quarter as it also logged an impressive beat of analysts’ revenue estimates and a solid beat of analysts’ adjusted operating income estimates.

MasTec achieved the fastest revenue growth among its peers. The stock is down 9.7% since reporting and currently trades at $193.10.

Read our full, actionable report on MasTec here, it’s free for active Edge members.