Q2 Earnings Highlights: Dycom (NYSE:DY) Vs The Rest Of The Engineering and Design Services Stocks

As the Q2 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the engineering and design services industry, including Dycom (NYSE:DY) and its peers.

Companies providing engineering and design services boast ever-evolving technical expertise. Compared to their counterparts who manufacture and sell physical products, these companies can also pivot faster to more trending areas due to their smaller physical asset bases. Green energy and water conservation, for example, are current themes driving incremental demand in this space. On the other hand, those providing engineering and design services are at the whim of construction and infrastructure project volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates.

The 5 engineering and design services stocks we track reported a very strong Q2. As a group, revenues beat analysts’ consensus estimates by 1.9% while next quarter’s revenue guidance was 0.6% above.

After much suspense, the Federal Reserve cut its policy rate by 50bps (half a percent) in September 2024. This marks the central bank’s first easing of monetary policy since 2020 and the end of its most pointed inflation-busting campaign since the 1980s. Inflation had begun to run hot in 2021 post-COVID due to a confluence of factors such as supply chain disruptions, labor shortages, and stimulus spending. While CPI (inflation) readings have been supportive lately, employment measures have prompted some concern. Going forward, the markets will debate whether this rate cut (and more potential ones in 2024 and 2025) is perfect timing to support the economy or a bit too late for a macro that has already cooled too much.

Luckily, engineering and design services stocks have performed well with share prices up 23.2% on average since the latest earnings results.

Dycom (NYSE:DY)

Working alongside some of the most popular mobile carriers in the world, Dycom (NYSE:DY) builds and maintains telecommunications infrastructure.

Dycom reported revenues of $1.20 billion, up 15.5% year on year. This print was in line with analysts’ expectations, and overall, it was a very strong quarter for the company with an impressive beat of analysts’ operating margin estimates and a decent beat of analysts’ earnings estimates.

The stock is down 2% since reporting and currently trades at $190.81.

Is now the time to buy Dycom? Access our full analysis of the earnings results here, it’s free.

Best Q2: EMCOR (NYSE:EME)

Through its network of over 70 subsidiaries, EMCOR (NYSE:EME) provides electrical, mechanical, and building construction and services

EMCOR reported revenues of $3.67 billion, up 20.4% year on year, outperforming analysts’ expectations by 3.9%. The business had an exceptional quarter with an impressive beat of analysts’ earnings and operating margin estimates.

EMCOR delivered the fastest revenue growth and highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 23.5% since reporting. It currently trades at $440.36.

Is now the time to buy EMCOR? Access our full analysis of the earnings results here, it’s free.

Weakest Q2: MasTec (NYSE:MTZ)

Involved in the 1996 Olympic Games MasTec (NYSE:MTZ) is an infrastructure construction company that specializes in the telecommunications, energy, and utility industries.

MasTec reported revenues of $2.96 billion, up 3% year on year, falling short of analysts’ expectations by 4.2%. Still, it was a satisfactory quarter as it posted an impressive beat of analysts’ operating margin estimates.

MasTec delivered the weakest performance against analyst estimates, slowest revenue growth, and weakest full-year guidance update in the group. Interestingly, the stock is up 28.3% since the results and currently trades at $136.02.

Read our full analysis of MasTec’s results here.

AECOM (NYSE:ACM)

Founded in 1990 when a group of engineers from five companies decided to merge, AECOM (NYSE:ACM) provides various infrastructure consulting services.

AECOM reported revenues of $4.15 billion, up 13.3% year on year. This result topped analysts’ expectations by 5.2%. It was a strong quarter as it also put up a decent beat of analysts’ operating margin and earnings estimates.

AECOM pulled off the biggest analyst estimates beat among its peers. The stock is up 21.9% since reporting and currently trades at $105.55.

Read our full, actionable report on AECOM here, it’s free.

Sterling (NASDAQ:STRL)

Involved in the construction of a major highway, the Grand Parkway in Houston, TX, Sterling Infrastructure (NASDAQ:STRL) provides civil infrastructure construction.

Sterling reported revenues of $582.8 million, up 11.6% year on year. This print topped analysts’ expectations by 4.1%. Overall, it was a very strong quarter as it also put up optimistic earnings guidance for the full year and a solid beat of analysts’ earnings estimates.

The stock is up 44.1% since reporting and currently trades at $148.04.

Read our full, actionable report on Sterling here, it’s free.

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