Intrinsic value of Dycom Industries, Inc. - DY

Previous Close

$56.22

  Intrinsic Value

$73.82

stock screener

  Rating & Target

buy

+31%

Previous close

$56.22

 
Intrinsic value

$73.82

 
Up/down potential

+31%

 
Rating

buy

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

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 1.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  14.30
  13.37
  12.53
  11.78
  11.10
  10.49
  9.94
  9.45
  9.00
  8.60
  8.24
  7.92
  7.63
  7.36
  7.13
  6.91
  6.72
  6.55
  6.40
  6.26
  6.13
  6.02
  5.92
  5.82
  5.74
  5.67
  5.60
  5.54
  5.49
  5.44
Revenue, $m
  3,575
  4,053
  4,561
  5,099
  5,665
  6,259
  6,881
  7,531
  8,210
  8,916
  9,651
  10,415
  11,209
  12,035
  12,892
  13,784
  14,711
  15,674
  16,677
  17,720
  18,806
  19,938
  21,118
  22,348
  23,631
  24,970
  26,369
  27,830
  29,357
  30,953
Variable operating expenses, $m
  3,247
  3,674
  4,128
  4,609
  5,115
  5,647
  6,204
  6,785
  7,392
  8,023
  8,632
  9,315
  10,026
  10,764
  11,531
  12,329
  13,158
  14,020
  14,916
  15,849
  16,821
  17,833
  18,888
  19,988
  21,136
  22,334
  23,585
  24,892
  26,257
  27,685
Fixed operating expenses, $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
Total operating expenses, $m
  3,247
  3,674
  4,128
  4,609
  5,115
  5,647
  6,204
  6,785
  7,392
  8,023
  8,632
  9,315
  10,026
  10,764
  11,531
  12,329
  13,158
  14,020
  14,916
  15,849
  16,821
  17,833
  18,888
  19,988
  21,136
  22,334
  23,585
  24,892
  26,257
  27,685
Operating income, $m
  329
  379
  433
  490
  549
  612
  678
  746
  818
  893
  1,019
  1,099
  1,183
  1,270
  1,361
  1,455
  1,553
  1,655
  1,761
  1,871
  1,985
  2,105
  2,229
  2,359
  2,495
  2,636
  2,784
  2,938
  3,099
  3,268
EBITDA, $m
  528
  599
  674
  753
  837
  925
  1,017
  1,113
  1,213
  1,317
  1,426
  1,539
  1,656
  1,778
  1,905
  2,036
  2,173
  2,315
  2,464
  2,618
  2,778
  2,945
  3,120
  3,301
  3,491
  3,689
  3,895
  4,111
  4,337
  4,573
Interest expense (income), $m
  17
  47
  57
  68
  79
  91
  104
  117
  131
  146
  161
  177
  193
  210
  228
  246
  265
  285
  306
  328
  350
  373
  398
  423
  449
  477
  505
  535
  567
  599
  633
Earnings before tax, $m
  282
  322
  365
  410
  458
  508
  561
  615
  672
  732
  842
  907
  973
  1,043
  1,115
  1,190
  1,268
  1,349
  1,433
  1,521
  1,612
  1,707
  1,807
  1,910
  2,018
  2,131
  2,248
  2,371
  2,500
  2,634
Tax expense, $m
  76
  87
  99
  111
  124
  137
  151
  166
  182
  198
  227
  245
  263
  282
  301
  321
  342
  364
  387
  411
  435
  461
  488
  516
  545
  575
  607
  640
  675
  711
Net income, $m
  206
  235
  266
  300
  334
  371
  409
  449
  491
  534
  615
  662
  711
  761
  814
  869
  925
  985
  1,046
  1,110
  1,177
  1,246
  1,319
  1,394
  1,473
  1,555
  1,641
  1,731
  1,825
  1,923

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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
Total assets, $m
  2,398
  2,719
  3,059
  3,420
  3,799
  4,198
  4,615
  5,051
  5,506
  5,980
  6,473
  6,985
  7,518
  8,071
  8,647
  9,245
  9,866
  10,513
  11,185
  11,885
  12,613
  13,372
  14,163
  14,988
  15,849
  16,747
  17,685
  18,665
  19,689
  20,760
Adjusted assets (=assets-cash), $m
  2,398
  2,719
  3,059
  3,420
  3,799
  4,198
  4,615
  5,051
  5,506
  5,980
  6,473
  6,985
  7,518
  8,071
  8,647
  9,245
  9,866
  10,513
  11,185
  11,885
  12,613
  13,372
  14,163
  14,988
  15,849
  16,747
  17,685
  18,665
  19,689
  20,760
Revenue / Adjusted assets
  1.491
  1.491
  1.491
  1.491
  1.491
  1.491
  1.491
  1.491
  1.491
  1.491
  1.491
  1.491
  1.491
  1.491
  1.491
  1.491
  1.491
  1.491
  1.491
  1.491
  1.491
  1.491
  1.491
  1.491
  1.491
  1.491
  1.491
  1.491
  1.491
  1.491
Average production assets, $m
  769
  871
  981
  1,096
  1,218
  1,346
  1,479
  1,619
  1,765
  1,917
  2,075
  2,239
  2,410
  2,587
  2,772
  2,964
  3,163
  3,370
  3,586
  3,810
  4,043
  4,287
  4,540
  4,805
  5,081
  5,369
  5,669
  5,983
  6,312
  6,655
Working capital, $m
  787
  892
  1,003
  1,122
  1,246
  1,377
  1,514
  1,657
  1,806
  1,961
  2,123
  2,291
  2,466
  2,648
  2,836
  3,032
  3,236
  3,448
  3,669
  3,898
  4,137
  4,386
  4,646
  4,916
  5,199
  5,493
  5,801
  6,123
  6,458
  6,810
Total debt, $m
  1,059
  1,257
  1,467
  1,690
  1,924
  2,170
  2,427
  2,696
  2,977
  3,269
  3,573
  3,890
  4,218
  4,560
  4,915
  5,284
  5,667
  6,066
  6,481
  6,913
  7,362
  7,831
  8,319
  8,828
  9,359
  9,913
  10,492
  11,096
  11,728
  12,389
Total liabilities, $m
  1,480
  1,677
  1,888
  2,110
  2,344
  2,590
  2,848
  3,117
  3,397
  3,689
  3,994
  4,310
  4,639
  4,980
  5,335
  5,704
  6,087
  6,486
  6,901
  7,333
  7,782
  8,251
  8,739
  9,248
  9,779
  10,333
  10,912
  11,516
  12,148
  12,809
Total equity, $m
  918
  1,041
  1,172
  1,310
  1,455
  1,608
  1,768
  1,935
  2,109
  2,290
  2,479
  2,675
  2,879
  3,091
  3,312
  3,541
  3,779
  4,026
  4,284
  4,552
  4,831
  5,122
  5,425
  5,741
  6,070
  6,414
  6,773
  7,149
  7,541
  7,951
Total liabilities and equity, $m
  2,398
  2,718
  3,060
  3,420
  3,799
  4,198
  4,616
  5,052
  5,506
  5,979
  6,473
  6,985
  7,518
  8,071
  8,647
  9,245
  9,866
  10,512
  11,185
  11,885
  12,613
  13,373
  14,164
  14,989
  15,849
  16,747
  17,685
  18,665
  19,689
  20,760
Debt-to-equity ratio
  1.150
  1.210
  1.250
  1.290
  1.320
  1.350
  1.370
  1.390
  1.410
  1.430
  1.440
  1.450
  1.470
  1.480
  1.480
  1.490
  1.500
  1.510
  1.510
  1.520
  1.520
  1.530
  1.530
  1.540
  1.540
  1.550
  1.550
  1.550
  1.560
  1.560
Adjusted equity ratio
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  206
  235
  266
  300
  334
  371
  409
  449
  491
  534
  615
  662
  711
  761
  814
  869
  925
  985
  1,046
  1,110
  1,177
  1,246
  1,319
  1,394
  1,473
  1,555
  1,641
  1,731
  1,825
  1,923
Depreciation, amort., depletion, $m
  199
  220
  241
  264
  288
  313
  339
  366
  395
  425
  407
  439
  473
  507
  544
  581
  620
  661
  703
  747
  793
  841
  890
  942
  996
  1,053
  1,112
  1,173
  1,238
  1,305
Funds from operations, $m
  405
  455
  507
  563
  622
  684
  748
  815
  886
  959
  1,022
  1,101
  1,183
  1,269
  1,357
  1,450
  1,546
  1,645
  1,749
  1,857
  1,970
  2,087
  2,209
  2,336
  2,469
  2,608
  2,753
  2,904
  3,063
  3,228
Change in working capital, $m
  98
  105
  112
  118
  125
  131
  137
  143
  149
  155
  162
  168
  175
  182
  189
  196
  204
  212
  221
  230
  239
  249
  259
  271
  282
  295
  308
  321
  336
  351
Cash from operations, $m
  307
  349
  396
  445
  497
  553
  611
  672
  736
  803
  860
  933
  1,008
  1,087
  1,169
  1,253
  1,342
  1,433
  1,529
  1,628
  1,731
  1,838
  1,950
  2,066
  2,187
  2,313
  2,445
  2,583
  2,727
  2,877
Maintenance CAPEX, $m
  -132
  -151
  -171
  -192
  -215
  -239
  -264
  -290
  -318
  -346
  -376
  -407
  -439
  -473
  -507
  -544
  -581
  -620
  -661
  -703
  -747
  -793
  -841
  -890
  -942
  -996
  -1,053
  -1,112
  -1,173
  -1,238
New CAPEX, $m
  -97
  -103
  -109
  -116
  -122
  -128
  -134
  -140
  -146
  -152
  -158
  -164
  -171
  -177
  -184
  -192
  -199
  -207
  -216
  -224
  -234
  -243
  -254
  -264
  -276
  -288
  -301
  -314
  -328
  -343
Cash from investing activities, $m
  -229
  -254
  -280
  -308
  -337
  -367
  -398
  -430
  -464
  -498
  -534
  -571
  -610
  -650
  -691
  -736
  -780
  -827
  -877
  -927
  -981
  -1,036
  -1,095
  -1,154
  -1,218
  -1,284
  -1,354
  -1,426
  -1,501
  -1,581
Free cash flow, $m
  78
  96
  116
  137
  161
  186
  213
  242
  273
  305
  326
  362
  398
  437
  477
  518
  561
  606
  652
  700
  750
  802
  855
  911
  969
  1,029
  1,092
  1,157
  1,225
  1,296
Issuance/(repayment) of debt, $m
  186
  198
  210
  222
  234
  246
  258
  269
  281
  292
  304
  316
  329
  342
  355
  369
  383
  399
  415
  432
  450
  468
  488
  509
  531
  554
  579
  605
  632
  661
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  186
  198
  210
  222
  234
  246
  258
  269
  281
  292
  304
  316
  329
  342
  355
  369
  383
  399
  415
  432
  450
  468
  488
  509
  531
  554
  579
  605
  632
  661
Total cash flow (excl. dividends), $m
  264
  294
  326
  360
  395
  432
  471
  512
  554
  598
  630
  678
  727
  778
  832
  887
  945
  1,005
  1,067
  1,132
  1,200
  1,270
  1,343
  1,420
  1,500
  1,584
  1,671
  1,762
  1,857
  1,957
Retained Cash Flow (-), $m
  -114
  -123
  -130
  -138
  -145
  -153
  -160
  -167
  -174
  -181
  -189
  -196
  -204
  -212
  -220
  -229
  -238
  -248
  -258
  -268
  -279
  -291
  -303
  -316
  -330
  -344
  -359
  -375
  -392
  -410
Prev. year cash balance distribution, $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 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
  150
  171
  195
  221
  250
  279
  311
  344
  380
  416
  441
  481
  523
  566
  611
  658
  707
  757
  810
  864
  921
  979
  1,041
  1,104
  1,170
  1,239
  1,311
  1,386
  1,465
  1,546
Discount rate, %
  7.50
  7.88
  8.27
  8.68
  9.12
  9.57
  10.05
  10.55
  11.08
  11.63
  12.22
  12.83
  13.47
  14.14
  14.85
  15.59
  16.37
  17.19
  18.05
  18.95
  19.90
  20.89
  21.94
  23.04
  24.19
  25.40
  26.67
  28.00
  29.40
  30.87
PV of cash for distribution, $m
  139
  147
  154
  159
  161
  161
  159
  154
  147
  138
  124
  113
  101
  89
  77
  65
  54
  44
  35
  27
  20
  15
  11
  8
  5
  3
  2
  1
  1
  0
Current shareholders' claim on cash, %
  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, Inc. (DY)

Valuation Ratios
P/E Ratio 11.1
Price to Sales 0.6
Price to Book 2.6
Price to Tangible Book
Price to Cash Flow 6.8
Price to Free Cash Flow 31.8
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 $3128 million for the last fiscal year's total revenue generated by Dycom Industries, Inc.. The default revenue input number comes from 0001 income statement of Dycom Industries, Inc.. 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 14.3% 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 7.5%, whose default value for DY is calculated based on our internal credit rating of Dycom Industries, Inc., 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, Inc..
    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 91%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 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 5.4% for Dycom Industries, Inc..

Corporate tax rate of 27% is the nominal tax rate for Dycom Industries, Inc.. 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 21.5%.

Life of production assets of 5.1 years is the average useful life of capital assets used in Dycom Industries, Inc. 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 22%. 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 - $804.168 million for Dycom Industries, Inc. - 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 31.383 million for Dycom Industries, Inc. 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, Inc. at the current share price and the inputted number of shares is $1.8 billion.

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