Dycom (NYSE:DY), MasTec (NYSE:MTZ) Organic Growth Looks Strong

Reporting on a field trip they made to Dycom (NYSE:DY) and MasTec (NYSE:MTZ), withing the Diversified Industrials/Specialty Contracting. FBR Capital said they came away with a positive outlook for Dycom (NYSE:DY) and MasTec (NYSE:MTZ) within the sector.

FBR said, "Last week, we hosted a field trip to visit the management teams of Dycom Industries and MasTec. We walked away from the meetings with high conviction that business opportunities will accelerate in 2011 across a number of end markets, including wireline and wireless telecommunications, and electric transmission. An important characteristic of the improvement expected in this cycle is that the breadth of opportunities, which is across many customers, is providing greater project selectivity, which in turn should provide favorable pricing and margin expansion. In addition, much of the growth appears to be through multiyear programs, which improves long-term visibility for the contractors. The valuations also remain attractive relative to historical levels, particularly given growth prospects. DY currently trades at 4.5x CY2011 EV/EBITDA, versus its historical average of 8.5x. MTZ currently trades at 6.0x estimated 2011 EV/EBITDA (inclusive of earnout liability), versus the peer historical average of around 10x. Given the improving prospects for organic revenue growth, we expect valuation multiples to expand back to historical levels."

Dycom closed Tuesday at $14.62, up $0.23, or 1.60 percent. MasTec closed at $14.04, down $0.29, or 2.02 percent.