NEW YORK ( TheStreet) -- Dycom Industries (NYSE: DY) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and poor profit margins.
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- DY's revenue growth has slightly outpaced the industry average of 14.7%. Since the same quarter one year prior, revenues rose by 17.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- 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. This trend suggests that the performance of the business is improving. 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 ($1.16 versus $0.46).
- Despite currently having a low debt-to-equity ratio of 0.50, 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 1.71 is high and demonstrates strong liquidity.
- The gross profit margin for DYCOM INDUSTRIES INC is rather low; currently it is at 18.50%. Regardless of DY's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, DY's net profit margin of 3.30% compares favorably to the industry average.
- Net operating cash flow has significantly decreased to -$2.40 million or 152.88% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
-- Written by a member of TheStreet Ratings Staff