The build-out of fiber and wireless telecommunications is continuing to accelerate, although it has been doing so relatively quietly. But you can see it in Dycom Industries (DY) earnings results for the past three fiscal years, having risen 300% since fiscal 2014.
Google Fiber, beginning with a pilot in Kansas City to provide super high speed internet, is spreading, and fast. This has the cable and telephone companies in an absolute scramble to compete, both on price and on upgrading telecommunications infrastructure. Currently, Action Alerts PLUS charity portfolio holding Google (GOOGL) is beginning installations in Atlanta, Nashville, Austin and Provo, with many more thereafter. Check out the website at fiber.google.com; it is fascinating, like most things Alphabet.
This requires contracting and project management services. This is where Dycom Industries comes in. It is the largest public contractor of telecommunications in the U.S. The company has a strong alliance with the largest cable and telecommunications companies. For instance, AT&T (T) is currently Dycom's largest customer.
Google is offering television, high-speed WiFi, firewall protection and online network management on a new network. The cable and telecommunications companies are spending tons of money to upgrade high-speed fiber and wireless infrastructure in anticipation of Google entering more markets. It's another business model being disrupted by Google, and another reminder that growth is nowhere near dead.
As a result, Dycom is enjoying the best of both worlds at the moment. Last night, the company reported earnings of $1.08 per share, exceeding quarterly estimates by 46%. Also, the company provided forward quarterly guidance 12% above street forecasts on very strong revenue.
There is a lot of runway as this build-out continues. Dycom is well positioned, with the assets and domain expertise to remain in the (very profitable) crosshairs of a budding infrastructure war between Google and the traditional cable and telecommunications companies.