Daktronics, Inc. (DAKT) | Investment Case

1. Company Snapshot

1.a. Company Description

Daktronics, Inc.designs, manufactures, markets, and sells electronic display systems and related products worldwide.It operates through five segments: Commercial, Live Events, High School Park and Recreation, Transportation, and International.

The company offers video display systems, such as displays to show various levels of video, graphics, and animation; indoor and outdoor light emitting diodes (LED) video displays, including centerhung, landmark, ribbon board, and corporate office entrance displays, as well as video walls and hanging banners; mobile and modular display systems; architectural lighting and display products; indoor and outdoor scoreboards for various sports, digit displays, scoring and timing controllers, statistics software, and other related products; and timing systems for sports events primarily aquatics and track competitions, as well as swimming touchpads, race start systems, and relay take-off platforms.It also provides control components for video displays in live event applications; message displays; ITS dynamic message signs, including LED displays for road management; mass transit displays; and sound systems for indoor and outdoor sports venues.In addition, the company offers out-of-home advertising displays comprising digital billboards and street furniture displays; DataTime product line that consists of outdoor time and temperature displays; and Fuelight digit displays designed for the petroleum industry.

Further, it provides ADFLOW DMS systems that include indoor networked solutions for retailers, convenience stores, and other businesses; and Venus Control Suite, Show Control, Vanguard, and others, as well as maintenance and professional services related to its products.The company sells its products through direct sales and resellers.Daktronics, Inc.

was founded in 1968 and is headquartered in Brookings, South Dakota.

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1.b. Last Insights on DAKT

Daktronics' recent performance was driven by its solid growth attributes, including a strong Q1 earnings beat, with quarterly earnings of $0.33 per share, exceeding the Zacks Consensus Estimate of $0.24 per share. The company also secured major orders through multiple large stadium projects, contributing to its all-time high. Additionally, Daktronics' digital transformation and cost-saving initiatives are expected to drive margin expansion. The company's order growth was 17% in Q4, indicating a return to solid revenue growth. Its cash balance stood at $128 million, up 55% in operating cash flow.

1.c. Company Highlights

Last Price	24.26
Change Percentage	2.97%
Open	23.62
Previous Close	23.56
Market Cap ( Millions)	1183
Volume	700217
Year High	24.38
Year Low	10.24
M A 50	19.88
M A 200	17.71

FCF Yield	5.22%
Dividend Yield	0.00%
ROE	2.63%
Debt / Equity	10.23%
Net Debt / EBIDTA	71.91%
Price To Book	3.98
Price Earnings Ratio	160.53
Price To FCF	19.16
Price To sales	1.54
EV / EBITDA	28.66

2. Daktronics' Strong Q2 FY '26 Earnings: A Closer Look

Daktronics reported a robust financial performance in Q2 FY '26, with revenue growth at the top end of their 7% to 10% target range. The company's gross profit margin was 27%, and operating margin was 9.4%, both improved from last year. The EPS came out at $0.35, beating estimates of $0.265. The strong earnings were driven by exemplary execution, with the completion of large-scale installations, including Miami Freedom Park in Major League Soccer and Aramco Stadium in Saudi Arabia.

Publication Date: Dec -20

                                    📋 Highlights
                                    Live Events Order Growth::
                                                26.5% year-over-year increase, driven by 5 Major League baseball stadium projects and arena enhancements.
Transportation Orders Growth::
                                                15% year-over-year increase due to demand in Intelligent Transportation Systems and aviation.
International Orders Surge::
                                                23.6% year-over-year growth, expanding presence beyond North America with 30,000+ U.S. high school projects.
Margin Improvements::
                                                Gross profit margin rose to 27%, operating margin at 9.4%, nearing 10%-12.5% target range.
New Mexico Facility::
                                                Saltillo, Mexico plant complements U.S. operations, offering production flexibility and tariff optimization.

                                

Segment Performance

The Live Events business drove 26.5% order growth from last year, with 5 for 5 on large Major League baseball projects in fiscal year '26. The Commercial business saw strong growth in on-premise advertising, while the Transportation business orders grew 15% from last year. The International business also performed well, with second-quarter orders increasing 23.6% from last year.

Operational Highlights

The company has made significant progress in innovation areas, including delivering solutions that address evolving market demands. The opening of a new facility in Saltillo, Mexico, will complement their existing footprint and offer optionality as they optimize production. As Bradley Wiemann mentioned, "about 80% of what we manufacture for our global customers still comes from our U.S. factories," indicating that the Mexico plant will not significantly impact their U.S. operations.

Valuation and Outlook

With the current P/E Ratio of 124.53 and P/S Ratio of 1.19, the market is pricing in a certain level of growth. Analysts estimate next year's revenue growth at 8.5%. The company's focus on increasing the contribution of the services suite to consolidated revenue creates more recurring and less capital-intensive revenue streams. The expected revenue growth, combined with the company's efforts to improve its inventory efficiency and working capital management, positions Daktronics for continued success.

Margin and Tariff Impact

The gross profit margin was affected by the extra tariff expense of $8.8 million, but the company's margin is still up from where it was a year ago. The operating margin has been positively impacted by value-added pricing and operating efficiencies, which have contributed to the operating margin. The company's ability to maintain its margins despite the tariff expense is a testament to its operational strength.

3. NewsRoom

DAKT vs. GRMN: Which Stock Is the Better Value Option?

Feb -02

Source: zacks.com

Daktronics (DAKT) Upgraded to Strong Buy: Here's Why

Jan -21

Source: zacks.com

New Strong Buy Stocks for January 21st

Jan -21

Source:

Daktronics to Present at Sidoti Small-Cap Investor Conference

Jan -14

Source: globenewswire.com

Head to Head Contrast: Daktronics (NASDAQ:DAKT) & Volex (OTC:VLXGF)

Jan -12

Source: defenseworld.net

Daktronics (NASDAQ:DAKT) Shares Cross Above 200-Day Moving Average – Here’s What Happened

Jan -08

Source: defenseworld.net

Daktronics (DAKT) is an Incredible Growth Stock: 3 Reasons Why

Dec -31

Source: zacks.com

DAKT vs. MKSI: Which Stock Is the Better Value Option?

Dec -31

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.62%)

6. Segments

Live Events

Expected Growth: 5%

Daktronics' Live Events segment growth is driven by increasing demand for immersive fan experiences, rising adoption of digital signage in stadiums and arenas, and growing investments in sports venue renovations and new constructions. Additionally, the company's strategic partnerships and innovative product offerings, such as LED displays and audio systems, contribute to its growth momentum.

Commercial

Expected Growth: 4%

Daktronics' commercial segment growth is driven by increasing demand for digital signage and display solutions, expansion into new markets, and strategic partnerships. Additionally, the company's focus on product innovation, such as LED displays and software solutions, has contributed to its growth. Furthermore, the rising need for data visualization and analytics in various industries has also fueled the segment's growth.

High School Park and Recreation

Expected Growth: 3%

High School Park and Recreation from Daktronics, Inc. growth is driven by increasing demand for digital scoreboards, rising investments in school infrastructure, and growing popularity of outdoor recreational activities. Additionally, advancements in LED technology and government initiatives promoting sports and fitness contribute to the segment's 3% growth.

International

Expected Growth: 7%

Daktronics' international segment growth is driven by increasing demand for digital displays and scoreboards in emerging markets, particularly in Asia and Latin America. The company's expansion into new regions, strategic partnerships, and investments in product innovation are also contributing to its 7% growth.

Transportation

Expected Growth: 5%

Daktronics' transportation segment growth is driven by increasing demand for intelligent transportation systems, rising adoption of digital signage in airports and highways, and growing need for real-time traffic management solutions. Additionally, government initiatives for infrastructure development and smart city projects are fueling growth.

7. Detailed Products

Scoreboards

Electronic scoreboards and displays for various sports and events, providing real-time scores, statistics, and information to spectators.

Video Displays

High-resolution LED video displays for outdoor and indoor applications, offering vibrant visuals and engaging content.

Message Displays

Electronic message centers and signs for displaying text, graphics, and animations, suitable for various applications.

Sound Systems

Professional audio solutions for sports venues, public spaces, and live events, providing high-quality sound and audio processing.

Show Control Systems

Customizable control systems for managing and synchronizing audio, video, and lighting elements in live events and productions.

Digital Billboards

High-brightness LED displays for outdoor advertising, offering high-resolution graphics and real-time content updates.

Transportation Displays

Electronic displays for transportation hubs, providing real-time information and schedules to passengers.

8. Daktronics, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Daktronics, Inc. faces moderate threat from substitutes, as there are limited alternatives to its display and control systems. However, the company's focus on innovation and customer satisfaction helps to mitigate this threat.

Bargaining Power Of Customers

Daktronics, Inc. has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's strong relationships with its customers and its ability to provide customized solutions further reduce the bargaining power of customers.

Bargaining Power Of Suppliers

Daktronics, Inc. relies on a few key suppliers for its components and materials. While the company has some bargaining power due to its size and reputation, it is still vulnerable to supplier disruptions and price increases.

Threat Of New Entrants

The display and control systems industry has high barriers to entry, including significant capital requirements and the need for specialized expertise. This makes it difficult for new entrants to compete with established players like Daktronics, Inc.

Intensity Of Rivalry

The display and control systems industry is highly competitive, with several established players competing for market share. Daktronics, Inc. must continually innovate and improve its products and services to maintain its market position.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	9.06%
Debt Cost	3.95%
Equity Weight	90.94%
Equity Cost	9.41%
WACC	8.92%
Leverage	9.96%

11. Quality Control: Daktronics, Inc. passed 7 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Bel Fuse

A-Score: 5.0/10

Value: 4.8

Growth: 7.0

Quality: 6.4

Yield: 0.0

Momentum: 8.0

Volatility: 3.7

1-Year Total Return ->

LSI Industries

A-Score: 4.5/10

Value: 4.7

Growth: 6.3

Quality: 5.9

Yield: 3.0

Momentum: 2.0

Volatility: 5.3

1-Year Total Return ->

CTS

A-Score: 4.4/10

Value: 4.4

Growth: 5.8

Quality: 6.9

Yield: 0.0

Momentum: 2.5

Volatility: 6.7

1-Year Total Return ->

SigmaTron International

A-Score: 4.3/10

Value: 9.5

Growth: 2.9

Quality: 2.5

Yield: 0.0

Momentum: 7.5

Volatility: 3.3

1-Year Total Return ->

Daktronics

A-Score: 3.9/10

Value: 3.5

Growth: 4.0

Quality: 4.7

Yield: 0.0

Momentum: 7.5

Volatility: 3.7

1-Year Total Return ->

Vishay Precision Group

A-Score: 3.7/10

Value: 2.6

Growth: 2.9

Quality: 4.3

Yield: 0.0

Momentum: 9.0

Volatility: 3.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

3.98%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

8.92%

Daktronics, Inc. - US2342641097

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on DAKT

1.c. Company Highlights

Strong Momentum

Average Quality

Average Yield

Earnings Miss

Revenues Miss

Average Growth

Earnings Beats

Revenues Beats

Lower Growth

Stable Momentum

Medium Volatility

Fairly Valued

2. Daktronics' Strong Q2 FY '26 Earnings: A Closer Look

Segment Performance

Operational Highlights

Valuation and Outlook

Margin and Tariff Impact

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.62%)

6. Segments

Live Events

Expected Growth: 5%

Commercial

Expected Growth: 4%

High School Park and Recreation

Expected Growth: 3%

International

Expected Growth: 7%

Transportation

Expected Growth: 5%

7. Detailed Products

Scoreboards

Video Displays

Message Displays

Sound Systems

Show Control Systems

Digital Billboards

Transportation Displays

8. Daktronics, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Daktronics, Inc. passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

24.26$

Current Price

24.26$

Potential

12.e Scoring ^Insights

12.f DCF ^BETA