$42.58
$253.83
bear $42.58
base $129.23
bull $253.83
margin of safety $65.00
market price* $253.61
Dycom Industries is one of the largest specialty contractors that build and maintain telecommunications networks in the United States: fiber, wireless and cable construction for carriers such as AT&T, Lumen, Verizon and Charter, plus underground facility locating and some utility work. In December 2025 it bought Power Solutions, an electrical contractor for data centers in the Washington, D.C., Maryland and Virginia area, for about $2.0 billion ($1.64 billion in cash, $351 million in Dycom stock and $65 million of assumed debt). In mid-2026 it added National Technology Integrators for about $271 million. Together these deals created a second segment, Building Systems, and raised debt from under $1 billion to about $2.8 billion. How we measure earnings. We count the cash the business produces for its owners: operating cash flow with working-capital swings removed, stock compensation treated as a real cost, lease costs charged in full, and capital spending (net of the trucks and equipment Dycom routinely sells) charged to the extent it maintains the business rather than grows it. Because we value the business before its lenders and then subtract what it owes, cash interest is added back. On that basis the telecom business has earned a median of about 5.5% of revenue over the last decade. That decade is a full cycle: the fiscal 2016-2017 peak, the fiscal 2020-2022 slump (the low was about 2.7% of revenue in fiscal 2022) and the current upswing. Fiscal 2026 (ended January 2026) was unusually strong at about $482 million, helped by a $53 million deferred-tax benefit, and we do not treat it as normal. Our starting point is about $490 million a year, or $16.14 per share. About $292 million comes from telecom: the 5.5% full-cycle margin applied to roughly $5.3 billion of fiscal 2026 telecom revenue, adjusted for that year's extra week. About $197 million comes from Building Systems. That figure assumes about $1.4 billion of revenue at an 18% margin before depreciation, which is below the first half of fiscal 2027, when the segment booked $793 million of revenue at about 21%. It also includes about $31 million a year of cash tax savings, because $1.886 billion of the Power Solutions goodwill and intangibles is deductible for tax over 15 years. Amortization of the acquired intangibles ($119 million in the first half of fiscal 2027 alone) is a non-cash accounting charge, so we add it back. The risk that the acquired customer relationships wear away is handled by fading Building Systems earnings in later years, not by cutting today's figure. Base case: $129 per share. The next two years run above the starting point because the work is already booked. Backlog reached a record $12.2 billion at August 1, 2026, with $6.5 billion expected within 12 months, and first-half fiscal 2027 revenue grew 51% (20.5% organically). Year one comes to about $588 million, 22% above fiscal 2026's $482 million; the year before, this measure grew about 92% per share. Telecom then returns to its normal level by year four and grows 3% a year through year ten. That is below the roughly 6% a year per share Dycom compounded from fiscal 2016 to 2025, through a downturn, from organic growth with its existing carriers and steady small acquisitions. After year ten, telecom holds flat for another twenty years, supported by the ongoing need to maintain networks Dycom has serviced for decades. Building Systems holds at about $250 million of earnings before depreciation through year ten, with no growth credited, and then fades to zero by year twenty. It has a short record under Dycom and depends on a handful of data-center builders in Northern Virginia. The business is worth about $6.49 billion ($213.61 per share). Net debt of about $2.56 billion ($84.38 per share) leaves $129.23 per share. Bear case: $43 per share. A pullback in carrier spending like fiscal 2020-2022 starts in year two. Telecom cash earnings fall to about $170 million for three years, then settle at $260 million with no growth and end after year 25. Data-center work in the D.C. region slows, so Building Systems earnings before depreciation fall to about $135 million and fade out by year 13. Customer concentration is real: Lumen, AT&T, Verizon and Charter each account for roughly 9-13% of receivables. In such a downturn, leverage would approach the credit agreement's limit of 4.5 times net debt to EBITDA, which steps down to 4.0 times in early 2028. We therefore add about $250 million to the debt for costlier refinancing or amendments around the April 2029 notes and the December 2030 term loan. Even at the trough, cash flow of about $280 million covers roughly $170 million of interest. The business is worth about $4.12 billion ($135.78 per share) against about $2.83 billion of debt ($93.20 per share), which leaves $42.58 per share. Bull case: $254 per share. Telecom stays at the backlog-supported level of the next two years, grows 5% a year through year ten, then grows 2% a year to year thirty. Building Systems keeps its first-half fiscal 2027 pace, about $334 million a year before depreciation, through year ten and fades out by year 25. The business is worth about $10.27 billion ($338.21 per share), less $2.56 billion of debt ($84.38 per share), for $253.83 per share. Debt. At August 1, 2026 Dycom owed $2.82 billion: a term loan A maturing December 2030 (about $1.5 billion), a term loan B maturing January 2033 (about $0.8 billion) and $500 million of 4.5% notes due April 2029. It held $340 million of cash, of which we treat $240 million as surplus. Because the 2029 notes carry a low fixed rate, they reduce the effective debt burden by about $18 million. Our previous assessment (base $114, bear $13, bull $257) was made with no reported results for the acquired business. Two quarters of filed Building Systems results, and confirmation that most of the purchase price is tax-deductible, raise the base and especially the bear case. The bull case is little changed. We now express risk through what happens to the business rather than through higher discount rates. The margin-of-safety price is about $65, about half of base value, because the business is cyclical, newly leveraged and depends on a newly acquired segment that is still unproven under Dycom. From that price the bear case implies a loss of about a third, while the base case implies the value roughly doubles. What could make this wrong. Operating cash flow in the first half of fiscal 2027 was only $79 million because receivables rose $521 million. Dycom shows this build every year (the year before, first-half operating cash flow was $3 million against $643 million for the full year), and revenue grew by half. Still, if collections lag, these earnings are worth less than stated. The Building Systems margin moved from about 18% in the first quarter to 24% in the second, and only two quarters of results exist under Dycom's ownership. A sharper or longer data-center slowdown, or the loss of a major carrier customer, would push value toward the bear case.