Daktronics (NASDAQ:DAKT) Shares Gap Up After Strong Earnings

Key Points

• Daktronics shares jumped after fiscal Q1 EPS of $0.40 beat the $0.35 consensus estimate, while revenue rose 7.1% year over year to $234.6 million, also exceeding expectations.
• The company reported improved gross margin, $31.4 million in operating cash flow and $154.6 million in cash against approximately $10.5 million of debt. Its $311.3 million backlog remained above $300 million for a sixth consecutive quarter, and Daktronics repurchased $4.4 million of stock.
• New orders fell 19.6% year over year to $191.8 million, and backlog declined from $360.3 million a year earlier, creating concerns about future growth despite management citing order timing. Analysts maintain a consensus “Hold” rating with a $29 price target.

Daktronics, Inc. (NASDAQ:DAKT - Get Free Report)'s stock price gapped up before the market opened on Wednesday following a stronger than expected earnings report. The stock had previously closed at $19.36, but opened at $21.50. Daktronics shares last traded at $20.45, with a volume of 368,414 shares traded.

The technology company reported $0.40 earnings per share (EPS) for the quarter, topping the consensus estimate of $0.35 by $0.05. Daktronics had a return on equity of 17.62% and a net margin of 5.41%.The business had revenue of $234.57 million during the quarter, compared to analyst estimates of $230.27 million. During the same quarter in the prior year, the firm earned $0.33 earnings per share.

Daktronics News Roundup

Here are the key news stories impacting Daktronics this week:

• Positive Sentiment: Fiscal Q1 diluted EPS rose 21.2% year over year to $0.40, beating the $0.35 consensus estimate and representing the company’s highest quarterly EPS in three years. Revenue increased 7.1% to $234.6 million, also topping expectations of $230.3 million despite one fewer reporting week. Daktronics Beats Q1 Earnings and Revenue Estimates
• Positive Sentiment: Operating income grew 7.2% to $24.9 million, net income increased to $19.4 million and gross margin improved to 30.5% from 29.7%. The company also generated $31.4 million in operating cash flow and ended the quarter with $154.6 million in cash against approximately $10.5 million of debt.
• Positive Sentiment: Management reported a product backlog of $311.3 million, keeping it above $300 million for the sixth consecutive quarter. It said several substantial orders were negotiated during Q1 but are expected to be recorded in Q2, potentially mitigating the reported decline in bookings. Daktronics Fiscal 2027 First Quarter Results
• Positive Sentiment: Daktronics repurchased $4.4 million of stock during the quarter under its $40 million authorization, signaling confidence in valuation and returning capital to shareholders. The company also launched updated share-repurchase and disclosure initiatives. Daktronics Share Repurchase and Disclosure Initiatives
• Neutral Sentiment: Sales growth was led by International, Transportation and Live Events, while Commercial and High School, Park and Recreation revenue declined. Analysts and financial commentary also continued to frame DAKT as a potential value stock, but these assessments do not represent new company guidance.
• Negative Sentiment: New orders fell 19.6% year over year to $191.8 million, and backlog declined from $360.3 million a year earlier to $311.3 million. Although management attributed some weakness to order timing, investors may view the figures as a risk to future revenue growth.
• Negative Sentiment: The operating margin remained flat at 10.6%, while operating expenses increased, including costs related to the XDC acquisition, microLED development, consulting and a large-project commission.

Wall Street Analysts Forecast Growth

Several research firms have weighed in on DAKT. Zacks Research raised Daktronics from a "strong sell" rating to a "hold" rating in a research report on Monday, June 15th. Wall Street Zen cut Daktronics from a "strong-buy" rating to a "buy" rating in a research note on Saturday, July 4th. Weiss Ratings upgraded Daktronics from a "hold (c)" rating to a "hold (c+)" rating in a research report on Thursday, June 25th. Finally, Roth Capital lifted their price target on Daktronics from $26.00 to $29.00 and gave the company a "buy" rating in a research report on Thursday, July 2nd. One analyst has rated the stock with a Buy rating and two have issued a Hold rating to the stock. Based on data from MarketBeat, Daktronics has a consensus rating of "Hold" and a consensus target price of $29.00.

Insider Buying and Selling at Daktronics

In related news, insider Sheila Mae Anderson sold 3,636 shares of the company's stock in a transaction on Wednesday, July 1st. The stock was sold at an average price of $20.01, for a total transaction of $72,756.36. Following the completion of the sale, the insider owned 48,371 shares in the company, valued at approximately $967,903.71. This represents a 6.99% decrease in their ownership of the stock. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which can be accessed through the SEC website. Also, EVP Bradley T. Wiemann sold 4,000 shares of the company's stock in a transaction dated Friday, July 17th. The shares were sold at an average price of $19.22, for a total transaction of $76,880.00. Following the sale, the executive vice president directly owned 125,946 shares of the company's stock, valued at $2,420,682.12. The trade was a 3.08% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. Insiders own 4.60% of the company's stock.

Hedge Funds Weigh In On Daktronics

Large investors have recently added to or reduced their stakes in the company. BlackRock Inc. purchased a new position in shares of Daktronics during the 2nd quarter valued at $68,158,000. Bank of New York Mellon Corp bought a new position in shares of Daktronics during the 2nd quarter valued at approximately $17,992,000. California State Teachers Retirement System grew its stake in shares of Daktronics by 2,359.9% in the 2nd quarter. California State Teachers Retirement System now owns 893,207 shares of the technology company's stock worth $17,471,000 after buying an additional 856,897 shares in the last quarter. Invesco Ltd. grew its position in Daktronics by 399.2% in the second quarter. Invesco Ltd. now owns 510,243 shares of the technology company's stock worth $7,715,000 after acquiring an additional 408,037 shares in the last quarter. Finally, Boston Partners purchased a new position in shares of Daktronics in the 4th quarter worth approximately $6,248,000. Hedge funds and other institutional investors own 61.69% of the company's stock.

Daktronics Price Performance

The company has a market capitalization of $989.74 million, a PE ratio of 22.50, a price-to-earnings-growth ratio of 0.64 and a beta of 1.68. The firm's 50 day simple moving average is $19.94 and its 200 day simple moving average is $20.71. The company has a quick ratio of 1.74, a current ratio of 2.31 and a debt-to-equity ratio of 0.18.

About Daktronics

Daktronics, Inc NASDAQ: DAKT is a leading designer and manufacturer of electronic display systems, video boards, scoreboards and related control systems. Founded in 1968 in Brookings, South Dakota by Al Kurtenbach and Duane Sander, the company has built a reputation for delivering custom visual display solutions to a wide range of markets. Its product portfolio includes large-format LED video displays, programmable message centers, digital billboards, and audio-visual solutions tailored to sports venues, transportation authorities, retail environments and live event producers.

The company's primary business activities encompass the engineering, fabrication and installation of display systems for customers around the world.

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