Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model. NEW YORK ( TheStreet) -- Dycom Industries (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 revenue growth, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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- Despite its growing revenue, the company underperformed as compared with the industry average of 9.7%. Since the same quarter one year prior, revenues slightly increased by 1.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has increased to $27.72 million or 42.62% when compared to the same quarter last year. In addition, DYCOM INDUSTRIES INC has also modestly surpassed the industry average cash flow growth rate of 33.02%.
- Despite currently having a low debt-to-equity ratio of 0.48, 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 1.80 is high and demonstrates strong liquidity.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Construction & Engineering industry and the overall market, DYCOM INDUSTRIES INC's return on equity is below that of both the industry average and the S&P 500.
- DYCOM INDUSTRIES INC's earnings per share declined by 7.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, DYCOM INDUSTRIES INC increased its bottom line by earning $1.15 versus $0.46 in the prior year. For the next year, the market is expecting a contraction of 3.0% in earnings ($1.12 versus $1.15).
-- Written by a member of TheStreet Ratings Staff