S&P Global Ratings upgrades Dycom Industries to BB+

Investing.com -- S&P Global Ratings has upgraded telecommunications contracting servicer Dycom Industries Inc (NYSE:DY). to ’BB+’ from ’BB’ with a stable outlook, citing the company’s steady earnings growth and strong profitability.

The credit rating agency expects Dycom to maintain S&P Global Ratings-adjusted debt to EBITDA below 2x through fiscal 2027, supported by the company’s multi-year track record of modest leverage and prudent approach to acquisitions.

As the largest contractor for wireline communications infrastructure services, Dycom is well-positioned to benefit from favorable demand trends for fiber-to-the-home (FTTH) and digital infrastructure services. The company’s market position will enable sustained sales growth over the next few years, supported by recurring maintenance services and expanded by FTTH new builds.

S&P Global Ratings projects Dycom’s revenue will expand to $5.3 billion this year, including approximately 7.5% organic revenue growth supplemented by full-year revenue contribution from its Black & Veatch wireless telecommunications infrastructure acquisition and other acquisitions completed in fiscal 2025. These acquisitions are estimated to contribute about $500 million in revenue.

At the end of the first quarter of fiscal 2026, Dycom reported record backlog of $8.1 billion, providing good visibility into future revenue. More than 50% of the company’s revenue comes from maintenance services, which provide a multi-year recurring revenue base.

The rating agency expects Dycom’s S&P Global Ratings-adjusted EBITDA margins to approach 14% through fiscal 2027, up from 13.3% in fiscal 2025, as the company expands its services to capitalize on sector tailwinds from FTTH deployments across the country, particularly in rural America.

AT&T (NYSE:T)’s recent announcement that it will acquire Lumen’s fiber business will increase Dycom’s dependence on its top customer, with AT&T’s revenue contribution potentially exceeding 30%. However, S&P Global Ratings believes Dycom’s decades-long relationship with AT&T and nationwide footprint will allow it to capture growth opportunities from AT&T’s plan to reach 60 million fiber locations by 06/24/2030.

The stable outlook reflects S&P Global Ratings’ expectation that Dycom will generate sustained revenue growth and margin expansion, with stable credit measures including adjusted debt to EBITDA below 2x and free operating cash flow to debt in the low- to mid-teens percent area.

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