Dycom Shorts Build Ahead of May Earnings

Dycom Industries enters its May 20 earnings window with shorts rebuilding sharply and options traders tilting bullish — an unusual divergence worth watching in a stock that has fallen twice in a row on results day.

Short interest has been rising fast. SI as a percentage of the free float jumped from roughly 5% to 6.7% over the past week alone — a 21% increase in shares short in seven days and a 35% climb over the past month. At 6.7% of float, this is the highest short positioning since at least mid-March, and the move has been concentrated and deliberate, not noise. The ORTEX short score edged above 44 this week after holding near 40 for most of the month — still moderate in absolute terms, but directionally it's heading higher. The borrow market tells a supporting story: cost to borrow rose 41% on the week to 0.47%, the highest level in roughly six weeks. Borrow availability is not tight — the lending pool has plenty of room — so the short build is demand-driven rather than a squeeze-risk setup.

Options traders are reading the situation differently. The put/call ratio has fallen to 0.49, more than 1.6 standard deviations below its 20-day average of 0.55. That is an unusually call-heavy skew for a stock that tends to trade with moderate protection demand. Put/call was as high as 1.87 over the past year — today's reading is near the low end of the 52-week range. In short: the derivatives market is positioned for the stock to go up, even as short sellers increase their bets against it. That divergence rarely resolves quietly.

The Street tilts bullish on valuation. The consensus is Buy, backed by 10 analysts, with a mean price target around $468 — roughly 20% above the current $390 close. The most relevant recent moves came in early March, when JP Morgan raised its target to $415 after earnings, and B. Riley took theirs to $485. Cantor Fitzgerald initiated with Overweight in mid-March and reiterated at $436 on March 27. None of the recent changes represent a new opinion from the past two weeks, so the analyst picture is supportive but not freshly catalysed. On valuation, the PE has expanded roughly 5 points over 30 days to 26.5x, while EV/EBITDA has drifted lower to 14.1x. EPS momentum over 90 days ranks in the 91st percentile — one of the most improved earnings-estimate profiles in the universe — yet EPS surprise ranks only in the 18th percentile, meaning Dycom has been missing against those rising expectations.

That EPS tension is the central question heading into May 20. The last two results days both ended in red: a drop of 8.3% on the day following the March 4 print, and a 1.9% fall after the February 25 quarter, each extending into additional losses over the following week. Expectations have been moving up aggressively, which raises the bar. Bulls point to a structurally compelling story — telecom infrastructure buildout, data centre demand, and the integration of Power Solutions — as the medium-term drivers. Bears focus on customer concentration (AT&T remains a dominant revenue source), labour availability risk, and a valuation that no longer looks cheap after a 23% rally year-to-date.

Insiders sold into that strength in late March. The CEO and CFO both sold shares on March 30 at $341.96, collecting roughly $4.8 million combined. The General Counsel and HR Director also sold. The awards that accompanied those sales indicate routine vesting, not discretionary selling per se — but net insider activity over 90 days runs $7.8 million in net sells, a notable directional tilt. Close peers have had a mixed week: PWR gained 2.4% while STRL and PRIM each fell more than 3%. DY's 4.3% weekly decline sits at the weaker end of the group.

The setup into May 20 is one where the short build and options skew are pulling in opposite directions, with a stock that has a recent history of disappointing on earnings day — even when the fundamental narrative sounds constructive. Whether the rising EPS estimates have finally been calibrated correctly is the question the next print will answer.