Intrinsic value of Dycom Industries - DY

Previous Close

$118.53

  Intrinsic Value

$67.15

stock screener

  Rating & Target

sell

-43%

Previous close

$118.53

 
Intrinsic value

$67.15

 
Up/down potential

-43%

 
Rating

sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of DY stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  14.74
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  3,067
  3,128
  3,200
  3,283
  3,375
  3,477
  3,589
  3,712
  3,844
  3,987
  4,140
  4,303
  4,478
  4,664
  4,861
  5,071
  5,293
  5,529
  5,777
  6,040
  6,318
  6,611
  6,920
  7,245
  7,588
  7,949
  8,330
  8,730
  9,151
  9,594
  10,061
Variable operating expenses, $m
 
  2,777
  2,840
  2,913
  2,994
  3,083
  3,182
  3,289
  3,405
  3,530
  3,665
  3,776
  3,929
  4,093
  4,266
  4,450
  4,645
  4,851
  5,070
  5,300
  5,544
  5,801
  6,072
  6,358
  6,659
  6,976
  7,309
  7,661
  8,030
  8,419
  8,828
Fixed operating expenses, $m
 
  72
  74
  75
  77
  79
  81
  83
  85
  87
  90
  92
  94
  96
  99
  101
  104
  107
  109
  112
  115
  118
  121
  124
  127
  130
  133
  136
  140
  143
  147
Total operating expenses, $m
  2,792
  2,849
  2,914
  2,988
  3,071
  3,162
  3,263
  3,372
  3,490
  3,617
  3,755
  3,868
  4,023
  4,189
  4,365
  4,551
  4,749
  4,958
  5,179
  5,412
  5,659
  5,919
  6,193
  6,482
  6,786
  7,106
  7,442
  7,797
  8,170
  8,562
  8,975
Operating income, $m
  275
  279
  286
  295
  304
  315
  326
  339
  353
  369
  385
  435
  454
  475
  497
  520
  545
  571
  599
  628
  659
  692
  727
  764
  803
  844
  887
  933
  981
  1,032
  1,086
EBITDA, $m
  423
  407
  417
  427
  440
  453
  469
  485
  503
  523
  544
  567
  592
  618
  646
  675
  707
  740
  776
  813
  853
  895
  939
  986
  1,036
  1,088
  1,143
  1,201
  1,262
  1,326
  1,394
Interest expense (income), $m
  17
  26
  27
  28
  29
  30
  31
  33
  35
  37
  38
  41
  43
  45
  48
  51
  53
  56
  60
  63
  67
  71
  75
  79
  83
  88
  93
  98
  104
  110
  116
Earnings before tax, $m
  250
  253
  260
  267
  275
  284
  295
  306
  319
  332
  347
  395
  412
  430
  449
  469
  491
  514
  539
  565
  592
  622
  653
  685
  720
  756
  794
  835
  878
  923
  970
Tax expense, $m
  93
  68
  70
  72
  74
  77
  80
  83
  86
  90
  94
  107
  111
  116
  121
  127
  133
  139
  145
  153
  160
  168
  176
  185
  194
  204
  214
  225
  237
  249
  262
Net income, $m
  157
  185
  190
  195
  201
  208
  215
  224
  233
  243
  253
  288
  300
  314
  328
  343
  359
  375
  393
  412
  433
  454
  476
  500
  525
  552
  580
  609
  641
  673
  708

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  39
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  1,899
  1,897
  1,941
  1,991
  2,047
  2,109
  2,177
  2,251
  2,331
  2,418
  2,510
  2,610
  2,716
  2,828
  2,948
  3,075
  3,210
  3,353
  3,504
  3,663
  3,831
  4,009
  4,196
  4,394
  4,602
  4,821
  5,051
  5,294
  5,550
  5,818
  6,101
Adjusted assets (=assets-cash), $m
  1,860
  1,897
  1,941
  1,991
  2,047
  2,109
  2,177
  2,251
  2,331
  2,418
  2,510
  2,610
  2,716
  2,828
  2,948
  3,075
  3,210
  3,353
  3,504
  3,663
  3,831
  4,009
  4,196
  4,394
  4,602
  4,821
  5,051
  5,294
  5,550
  5,818
  6,101
Revenue / Adjusted assets
  1.649
  1.649
  1.649
  1.649
  1.649
  1.649
  1.649
  1.649
  1.649
  1.649
  1.649
  1.649
  1.649
  1.649
  1.649
  1.649
  1.649
  1.649
  1.649
  1.649
  1.649
  1.649
  1.649
  1.649
  1.649
  1.649
  1.649
  1.649
  1.649
  1.649
  1.649
Average production assets, $m
  565
  576
  589
  604
  621
  640
  660
  683
  707
  734
  762
  792
  824
  858
  895
  933
  974
  1,017
  1,063
  1,111
  1,162
  1,216
  1,273
  1,333
  1,396
  1,463
  1,533
  1,606
  1,684
  1,765
  1,851
Working capital, $m
  620
  616
  630
  647
  665
  685
  707
  731
  757
  785
  815
  848
  882
  919
  958
  999
  1,043
  1,089
  1,138
  1,190
  1,245
  1,302
  1,363
  1,427
  1,495
  1,566
  1,641
  1,720
  1,803
  1,890
  1,982
Total debt, $m
  760
  762
  791
  823
  859
  899
  944
  992
  1,044
  1,100
  1,160
  1,224
  1,293
  1,366
  1,443
  1,526
  1,613
  1,706
  1,803
  1,907
  2,016
  2,131
  2,252
  2,380
  2,515
  2,657
  2,806
  2,964
  3,129
  3,303
  3,486
Total liabilities, $m
  1,228
  1,229
  1,258
  1,290
  1,326
  1,366
  1,411
  1,459
  1,511
  1,567
  1,627
  1,691
  1,760
  1,833
  1,910
  1,993
  2,080
  2,173
  2,270
  2,374
  2,483
  2,598
  2,719
  2,847
  2,982
  3,124
  3,273
  3,431
  3,596
  3,770
  3,953
Total equity, $m
  672
  668
  683
  701
  720
  742
  766
  792
  821
  851
  884
  919
  956
  996
  1,038
  1,083
  1,130
  1,180
  1,233
  1,289
  1,349
  1,411
  1,477
  1,547
  1,620
  1,697
  1,778
  1,864
  1,953
  2,048
  2,148
Total liabilities and equity, $m
  1,900
  1,897
  1,941
  1,991
  2,046
  2,108
  2,177
  2,251
  2,332
  2,418
  2,511
  2,610
  2,716
  2,829
  2,948
  3,076
  3,210
  3,353
  3,503
  3,663
  3,832
  4,009
  4,196
  4,394
  4,602
  4,821
  5,051
  5,295
  5,549
  5,818
  6,101
Debt-to-equity ratio
  1.131
  1.140
  1.160
  1.170
  1.190
  1.210
  1.230
  1.250
  1.270
  1.290
  1.310
  1.330
  1.350
  1.370
  1.390
  1.410
  1.430
  1.450
  1.460
  1.480
  1.490
  1.510
  1.520
  1.540
  1.550
  1.570
  1.580
  1.590
  1.600
  1.610
  1.620
Adjusted equity ratio
  0.340
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  157
  185
  190
  195
  201
  208
  215
  224
  233
  243
  253
  288
  300
  314
  328
  343
  359
  375
  393
  412
  433
  454
  476
  500
  525
  552
  580
  609
  641
  673
  708
Depreciation, amort., depletion, $m
  148
  128
  130
  133
  136
  139
  142
  146
  150
  154
  159
  132
  137
  143
  149
  156
  162
  170
  177
  185
  194
  203
  212
  222
  233
  244
  255
  268
  281
  294
  309
Funds from operations, $m
  170
  313
  320
  328
  337
  347
  358
  370
  383
  397
  412
  420
  438
  457
  477
  498
  521
  545
  571
  598
  626
  657
  689
  722
  758
  796
  835
  877
  921
  968
  1,017
Change in working capital, $m
  -86
  12
  14
  16
  18
  20
  22
  24
  26
  28
  30
  32
  34
  37
  39
  41
  44
  46
  49
  52
  55
  58
  61
  64
  68
  71
  75
  79
  83
  87
  92
Cash from operations, $m
  256
  301
  306
  311
  318
  326
  335
  346
  357
  369
  382
  388
  403
  420
  438
  457
  477
  499
  522
  546
  572
  599
  628
  658
  690
  724
  760
  798
  838
  880
  925
Maintenance CAPEX, $m
  0
  -94
  -96
  -98
  -101
  -103
  -107
  -110
  -114
  -118
  -122
  -127
  -132
  -137
  -143
  -149
  -156
  -162
  -170
  -177
  -185
  -194
  -203
  -212
  -222
  -233
  -244
  -255
  -268
  -281
  -294
New CAPEX, $m
  -201
  -11
  -13
  -15
  -17
  -19
  -21
  -22
  -24
  -26
  -28
  -30
  -32
  -34
  -36
  -39
  -41
  -43
  -46
  -48
  -51
  -54
  -57
  -60
  -63
  -66
  -70
  -74
  -78
  -82
  -86
Cash from investing activities, $m
  -209
  -105
  -109
  -113
  -118
  -122
  -128
  -132
  -138
  -144
  -150
  -157
  -164
  -171
  -179
  -188
  -197
  -205
  -216
  -225
  -236
  -248
  -260
  -272
  -285
  -299
  -314
  -329
  -346
  -363
  -380
Free cash flow, $m
  47
  196
  197
  198
  201
  204
  208
  213
  218
  225
  232
  231
  239
  248
  258
  269
  281
  293
  306
  320
  335
  351
  368
  386
  405
  425
  447
  469
  493
  518
  545
Issuance/(repayment) of debt, $m
  21
  24
  28
  32
  36
  40
  44
  48
  52
  56
  60
  64
  69
  73
  78
  82
  87
  92
  98
  103
  109
  115
  121
  128
  135
  142
  149
  157
  166
  174
  183
Issuance/(repurchase) of shares, $m
  -61
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -42
  24
  28
  32
  36
  40
  44
  48
  52
  56
  60
  64
  69
  73
  78
  82
  87
  92
  98
  103
  109
  115
  121
  128
  135
  142
  149
  157
  166
  174
  183
Total cash flow (excl. dividends), $m
  5
  221
  225
  231
  237
  244
  252
  261
  270
  281
  292
  295
  308
  322
  336
  352
  368
  385
  404
  424
  444
  466
  490
  514
  540
  567
  596
  627
  659
  692
  728
Retained Cash Flow (-), $m
  -115
  -13
  -15
  -18
  -20
  -22
  -24
  -26
  -28
  -30
  -33
  -35
  -37
  -40
  -42
  -45
  -47
  -50
  -53
  -56
  -59
  -63
  -66
  -69
  -73
  -77
  -81
  -85
  -90
  -95
  -100
Prev. year cash balance distribution, $m
 
  17
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  225
  209
  213
  217
  222
  228
  235
  242
  250
  259
  260
  271
  282
  294
  307
  321
  335
  351
  367
  385
  404
  424
  445
  467
  490
  515
  541
  569
  598
  628
Discount rate, %
 
  6.10
  6.41
  6.73
  7.06
  7.41
  7.79
  8.17
  8.58
  9.01
  9.46
  9.94
  10.43
  10.95
  11.50
  12.08
  12.68
  13.32
  13.98
  14.68
  15.41
  16.19
  16.99
  17.84
  18.74
  19.67
  20.66
  21.69
  22.77
  23.91
  25.11
PV of cash for distribution, $m
 
  212
  185
  175
  165
  156
  146
  136
  125
  115
  105
  92
  82
  73
  64
  55
  47
  40
  33
  27
  22
  17
  13
  10
  8
  6
  4
  3
  2
  1
  1
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Dycom Industries, Inc. is a provider of specialty contracting services throughout the United States and in Canada. The Company, through its subsidiaries, provides program management, engineering, construction, maintenance and installation services for telecommunications providers, underground facility locating services for various utilities, including telecommunications providers, and other construction and maintenance services for electric and gas utilities. The Company provides the labor, tools and equipment necessary to design, engineer, locate, maintain, expand, install and upgrade the telecommunications infrastructure of its customers. The Company also provides tower construction, lines and antenna installation, and foundation and equipment pad construction for wireless carriers, as well as equipment installation and material fabrication, and site testing services. The Company's subsidiaries include CertusView Technologies, LLC and Dycom Investments, Inc.

FINANCIAL RATIOS  of  Dycom Industries (DY)

Valuation Ratios
P/E Ratio 23.5
Price to Sales 1.2
Price to Book 5.5
Price to Tangible Book
Price to Cash Flow 14.4
Price to Free Cash Flow 67
Growth Rates
Sales Growth Rate 14.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 8.1%
Cap. Spend. - 3 Yr. Gr. Rate 17.7%
Financial Strength
Quick Ratio 2
Current Ratio 0.2
LT Debt to Equity 109.8%
Total Debt to Equity 113.1%
Interest Coverage 16
Management Effectiveness
Return On Assets 9.3%
Ret/ On Assets - 3 Yr. Avg. 8.7%
Return On Total Capital 11.6%
Ret/ On T. Cap. - 3 Yr. Avg. 10.4%
Return On Equity 25.5%
Return On Equity - 3 Yr. Avg. 22.2%
Asset Turnover 1.7
Profitability Ratios
Gross Margin 21.6%
Gross Margin - 3 Yr. Avg. 21.6%
EBITDA Margin 13.5%
EBITDA Margin - 3 Yr. Avg. 13.1%
Operating Margin 9%
Oper. Margin - 3 Yr. Avg. 8.4%
Pre-Tax Margin 8.2%
Pre-Tax Margin - 3 Yr. Avg. 7.5%
Net Profit Margin 5.1%
Net Profit Margin - 3 Yr. Avg. 4.7%
Effective Tax Rate 37.2%
Eff/ Tax Rate - 3 Yr. Avg. 37.6%
Payout Ratio 0%

DY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DY stock intrinsic value calculation we used $3067 million for the last fiscal year's total revenue generated by Dycom Industries. The default revenue input number comes from 2017 income statement of Dycom Industries. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our DY stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 6.1%, whose default value for DY is calculated based on our internal credit rating of Dycom Industries, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Dycom Industries.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of DY stock the variable cost ratio is equal to 88.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $70 million in the base year in the intrinsic value calculation for DY stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Dycom Industries.

Corporate tax rate of 27% is the nominal tax rate for Dycom Industries. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the DY stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for DY are equal to 18.4%.

Life of production assets of 6 years is the average useful life of capital assets used in Dycom Industries operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for DY is equal to 19.7%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $672 million for Dycom Industries - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 31.589 million for Dycom Industries is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Dycom Industries at the current share price and the inputted number of shares is $3.7 billion.

RELATED COMPANIES Price Int.Val. Rating
PWR Quanta Service 38.99 2.79  str.sell
MTZ MasTec 53.30 279.56  str.buy
WPCS WPCS Internati 1.05 0.13  str.sell
EME EMCOR Group 83.60 84.42  hold
IESC IES Holdings 17.90 13.65  sell
MYRG MYR Group 35.24 46.85  buy

COMPANY NEWS

▶ This Telecom Player Gets A Boost On A Price Target Hike   [Dec-21-17 04:16PM  Investor's Business Daily]
▶ Company News For Nov 21, 2017   [10:13AM  Zacks]
▶ Dycom Industries tops Street 1Q forecasts   [06:17AM  Associated Press]
▶ Bull of the Day: MasTec (MTZ)   [06:00AM  Zacks]
▶ New Strong Sell Stocks for September 13th   [Sep-13-17 08:15AM  Zacks]
▶ New Strong Sell Stocks for September 7th   [Sep-07-17 10:02AM  Zacks]
▶ Dycom Industries tops 4Q profit forecasts   [Aug-31-17 08:03PM  Associated Press]
▶ Dycom Stock Pummeled On Weak July-Quarter Sales, Guidance   [04:16PM  Investor's Business Daily]
▶ Dycom: You Call This a Hiccup?!?!   [01:49PM  Barrons.com]
▶ The Mystery of Dycom's Earnings Date?   [Aug-21-17 01:10PM  Barrons.com]
▶ 3 Value Stocks You Haven't Thought Of   [Jun-19-17 02:33PM  Motley Fool]
▶ New Strong Sell Stocks for June 14th   [Jun-14-17 10:17AM  Zacks]
▶ Dycom Crashes On Weak Sales, Earnings Outlook   [04:08PM  Investor's Business Daily]
Financial statements of DY
Follow us on:   twitter   twitter   twitter   twitter

ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.