Why would any rational investor want to own DY? In this fairly robust environment for capital spending by telco, writes "Slash", a professional investor with experience on both the buy-side and sell-side, the company has lowered guidance last three quarters.
VZ which accounts for 1/3 of DY revs has nothing but raised capex in recent times. DY announced that it expects revenues at low end of its previous guidance and EPS below the guidance. So not only does DY have any idea when VZ (or other revenues) are coming in they also do not really know what margins they can earn. Not a great situation. DY clearly has visibility issue and it has been hiring a lot of contractors to get work done, some of these new hires are not trained-hands which leads to lower yields hence lower margin.
I do not believe there is any thing to worry about from VZ and its capex spending plans the issue remains with DY. I am not too worried about MTZ (a competitor of DY) and believe MTZ might present a better opportunity given that its margins have more upside where as DY margins are headed lower. DY also counts BLS and CMCSA as major customers, so do not expect this company to just disappear. But near term issues could put a lid on upside for the stock.
« Opinions expressed here are those of the individual authors and do not necessarily represent the opinion of SeekingAlpha or its management. »
Not subscribed to this blog? You can get updated headlines for free by adding any of the Seeking Alpha Network Blogs to your My Yahoo page. Just log into your My Yahoo page, then go to this blog and click on the "+ My Yahoo" button on the top right of your screen.