NEW YORK ( TheStreet) -- Dycom Industries Inc (NYSE: DY) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company shows low profit margins. Highlights from the ratings report include:
- DYCOM INDUSTRIES INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, DYCOM INDUSTRIES INC increased its bottom line by earning $0.46 versus $0.15 in the prior year. This year, the market expects an improvement in earnings ($0.75 versus $0.46).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Construction & Engineering industry. The net income increased by 179.2% when compared to the same quarter one year prior, rising from $4.64 million to $12.97 million.
- DY's revenue growth trails the industry average of 18.4%. Since the same quarter one year prior, revenues slightly increased by 7.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Despite currently having a low debt-to-equity ratio of 0.53, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that DY's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.62 is high and demonstrates strong liquidity.
- Powered by its strong earnings growth of 216.66% and other important driving factors, this stock has surged by 64.44% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.