Dycom Industries (DY) Soars on Strong Backlog Growth and Federal Infrastructure Tailwinds – Why Now is the Time to Buy

Dycom Industries (NYSE: DY) has delivered a resounding earnings beat in Q1 2026, raising its full-year revenue guidance by double-digits and underscoring its position as a prime beneficiary of the global push for telecommunications infrastructure modernization. With a record backlog of $8.127 billion and strategic acquisitions accelerating growth, the company is poised to capitalize on long-term demand for fiber-to-the-home (FTTH), hyperscaler data centers, and federal broadband initiatives. Despite a recent stock surge, investors may still be underestimating DY's growth trajectory, making it a compelling buy for those betting on infrastructure trends.

A Backlog-Driven Growth Machine

Dycom's Q1 results were powered by a 10.2% year-over-year revenue increase to $1.259 billion, driven by a 50.9% jump in AT&T revenues to $325.1 million. But the real story lies in its backlog, now at a record $8.127 billion—up 17.6% from the end of fiscal 2025. Crucially, $4.685 billion of this backlog is expected to be completed within the next 12 months, providing exceptional near-term visibility. This backlog growth isn't just a numbers game; it reflects a pipeline of high-margin, recurring revenue streams from maintenance contracts, which account for over half of Dycom's business.

Strategic Acquisitions Fuel Organic Growth

Dycom's acquisition of Black & Veatch's wireless division in late 2024 has been a game-changer. This unit, now outperforming initial expectations, contributed significantly to the 10% organic revenue growth (excluding acquisitions) in Q1. The division's expertise in wireless infrastructure and equipment replacement has positioned Dycom to capitalize on the $800 billion global push to modernize cellular networks. Meanwhile, the company's hyperscaler segment—handling data center connectivity and middle-mile fiber projects—is expanding rapidly. A newly awarded hyperscaler contract, not yet in the backlog, is set to begin this year, further diversifying revenue streams.

Federal Broadband Programs: A Tailwind, Not a Hurdle

While the Broadband Equity, Access, and Deployment (BEAD) program's contributions to FY2026 are excluded from current guidance, its long-term impact cannot be ignored. States are now finalizing BEAD subgrants, with fiber infrastructure projects prioritized. Management expects BEAD-related revenue to begin flowing in FY2027, adding an estimated $200–$300 million annually. Even without BEAD, Dycom's growth is robust, driven by existing contracts with AT&T, Verizon, and hyperscalers. The company's disciplined capital allocation—$30.2 million in share buybacks in Q1 alone—reinforces its financial flexibility to weather any near-term macroeconomic headwinds.

Why the Stock's Surge Doesn't Tell the Full Story

While DY has risen 25% year-to-date, its valuation remains reasonable. At 14.5x forward EBITDA, it trades below its five-year average multiple, despite record backlog and margin expansion (adjusted EBITDA margins rose 40 basis points to 11.9%). Analysts at JPMorgan and Goldman Sachs have raised price targets to $185–$200, citing the backlog's durability and BEAD's untapped potential.

Risks? They're Manageable

Tariffs on imported components? Dycom's CFO noted they're “negligible” due to U.S.-sourced labor and materials. BEAD's delayed impact? Management has already factored in organic growth to offset it. Even in a recession, telecom infrastructure spending remains sticky, as seen during the 2008 crisis.

Conclusion: DY is a Buy for Infrastructure Bulls

Dycom's Q1 results and raised guidance ($5.29–5.425 billion in FY2026 revenue) highlight its ability to execute in a fragmented industry. With a backlog that guarantees growth for years and federal programs adding a tailwind, DY is a rare blend of near-term certainty and long-term upside. For investors seeking exposure to the $1.5 trillion U.S. infrastructure boom, DY offers a leveraged play at a reasonable price. The stock's recent rally may be impressive, but the best gains are likely ahead.

Action to Take: Buy DY at current levels, with a 12–18 month price target of $190–$210.

Data as of May 23, 2025. Past performance is not indicative of future results.