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It has outperformed industry peers like Carrier Global (CARR - Free Report) , Garmin (GRMN - Free Report) and SES AI (SES - Free Report) over the same timeframe. CARR and GRMN shares have gained 24.9% and 40.6%, respectively. SES shares have declined 42% YTD.
The outperformance in Daktronics shares can be attributed to strong top-line growth in fiscal 2024. DAKT reported net sales of $818.1 million, up 8.5% over fiscal 2023, driven by 8.7% growth in new product and service orders.
The designer and manufacturer of electronic scoreboards, programmable display systems and large-screen video displays for sporting, commercial and transportation applications benefited from strong 24% growth in Live Events and more than 20% growth in Transportation orders. International orders increased 7% year over year.
DAKT’s 2025 prospects are expected to benefit from its initiatives to upgrade internal systems and digital transformation projects. Its focus is on lowering costs through the addition of capacity flexibility, adjustment of production capabilities and improving installation methods.
However, DAKT shares meteoric rise brings this question into investors’ minds - will the initiatives be enough to make the bull run continue?
YTD Performance
Image Source: Zacks Investment Research
DAKT Stock to Benefit From Strong Order Growth
Daktronics prospects benefit from strong order growth, particularly in Live Events. A stable macroeconomic environment in North America has driven its order volume growth.
Strong market adoption of Daktronics’ digital display technology is a key catalyst. DAKT has been successfully winning clients across larger project-based sports and transportation businesses, driving top-line growth.
Daktronics expects Live Events demand to remain strong as venues enhance facilities to entertain fans and attract athletes. Focus on entertainment areas and in places like entryways, atriums, concourses and adjacent entertainment areas offers DAKT an option to expand its footprint through its Narrow Pixel Pitch (NPP) line of products.
The launch of the new Flip-Chip COB (Chip on Board) LED display family is the next step in evolving DAKT’s NPP product.
The company’s plan to develop the AV integrator network to market its narrow pixel pitch product lines, especially in control room applications used by military, utility, and transportation agencies, is a key catalyst. Daktronics has already installed 131 displays on 43 different bases globally.
It is gaining traction in the military end-market through the strong adoption of the Made in America control system and control path, as well as modules and displays.
DAKT’s investments in improving operating capacity resulted in more efficient fulfillment processes that resulted in the return to market expected lead times. Improved pricing, along with stable input costs, is expected to boost gross margin.
Daktronics Shares Undervalued
DAKT stock is cheap, as suggested by the Value Score of A.
In terms of the trailing 12-month Enterprise Value/Sales (EV/Sales) ratio, Daktronics is trading at 0.86X, lower than the Zacks Computer & Technology sector’s 7.03X.
EV/Sales Ratio (TTM)
Image Source: Zacks Investment Research
Weak Commercial Business a Concern for DAKT Stock
Daktronics’ prospects suffer from sluggishness in the Commercial business. Orders were down 14% in fiscal 2024.
Delayed buying by customers has been a key concern due to softness in large projects and slowness in the High School Park and Recreation and Transportation businesses.
DAKT’s Earnings Estimates Steady
The Zacks Consensus Estimate for fiscal 2025 revenues is currently pegged at $839.52 million, suggesting 2.62% growth over fiscal 2024.
The consensus mark for fiscal 2025 earnings is currently pegged at $1.13 per share, unchanged over the past 30 days but indicating an 11.72% decline over fiscal 2024.
Daktronics’ initiatives to improve operating efficiency and lower costs, as well as strong demand for NPP product bodes well for long-term investors. Hence, it would be better for investors who already own the stock to remain invested.
However, weakness in the commercial business is a near-term headwind.
Image: Bigstock
Daktronics Gains 81% YTD: How Should You Play the DAKT Stock?
Daktronics (DAKT - Free Report) shares have jumped 81% year to date (YTD), outperforming the Zacks Computer & Technology sector’s gain of 21.3% and the Zacks Electronics- Miscellaneous Products industry’s return of 15.7%.
It has outperformed industry peers like Carrier Global (CARR - Free Report) , Garmin (GRMN - Free Report) and SES AI (SES - Free Report) over the same timeframe. CARR and GRMN shares have gained 24.9% and 40.6%, respectively. SES shares have declined 42% YTD.
The outperformance in Daktronics shares can be attributed to strong top-line growth in fiscal 2024. DAKT reported net sales of $818.1 million, up 8.5% over fiscal 2023, driven by 8.7% growth in new product and service orders.
The designer and manufacturer of electronic scoreboards, programmable display systems and large-screen video displays for sporting, commercial and transportation applications benefited from strong 24% growth in Live Events and more than 20% growth in Transportation orders. International orders increased 7% year over year.
DAKT’s 2025 prospects are expected to benefit from its initiatives to upgrade internal systems and digital transformation projects. Its focus is on lowering costs through the addition of capacity flexibility, adjustment of production capabilities and improving installation methods.
However, DAKT shares meteoric rise brings this question into investors’ minds - will the initiatives be enough to make the bull run continue?
YTD Performance
Image Source: Zacks Investment Research
DAKT Stock to Benefit From Strong Order Growth
Daktronics prospects benefit from strong order growth, particularly in Live Events. A stable macroeconomic environment in North America has driven its order volume growth.
Strong market adoption of Daktronics’ digital display technology is a key catalyst. DAKT has been successfully winning clients across larger project-based sports and transportation businesses, driving top-line growth.
Daktronics expects Live Events demand to remain strong as venues enhance facilities to entertain fans and attract athletes. Focus on entertainment areas and in places like entryways, atriums, concourses and adjacent entertainment areas offers DAKT an option to expand its footprint through its Narrow Pixel Pitch (NPP) line of products.
The launch of the new Flip-Chip COB (Chip on Board) LED display family is the next step in evolving DAKT’s NPP product.
The company’s plan to develop the AV integrator network to market its narrow pixel pitch product lines, especially in control room applications used by military, utility, and transportation agencies, is a key catalyst. Daktronics has already installed 131 displays on 43 different bases globally.
It is gaining traction in the military end-market through the strong adoption of the Made in America control system and control path, as well as modules and displays.
DAKT’s investments in improving operating capacity resulted in more efficient fulfillment processes that resulted in the return to market expected lead times. Improved pricing, along with stable input costs, is expected to boost gross margin.
Daktronics Shares Undervalued
DAKT stock is cheap, as suggested by the Value Score of A.
In terms of the trailing 12-month Enterprise Value/Sales (EV/Sales) ratio, Daktronics is trading at 0.86X, lower than the Zacks Computer & Technology sector’s 7.03X.
EV/Sales Ratio (TTM)
Image Source: Zacks Investment Research
Weak Commercial Business a Concern for DAKT Stock
Daktronics’ prospects suffer from sluggishness in the Commercial business. Orders were down 14% in fiscal 2024.
Delayed buying by customers has been a key concern due to softness in large projects and slowness in the High School Park and Recreation and Transportation businesses.
DAKT’s Earnings Estimates Steady
The Zacks Consensus Estimate for fiscal 2025 revenues is currently pegged at $839.52 million, suggesting 2.62% growth over fiscal 2024.
The consensus mark for fiscal 2025 earnings is currently pegged at $1.13 per share, unchanged over the past 30 days but indicating an 11.72% decline over fiscal 2024.
Daktronics, Inc. Price and Consensus
Daktronics, Inc. price-consensus-chart | Daktronics, Inc. Quote
What Investors Should Do With DAKT Stock
Daktronics’ initiatives to improve operating efficiency and lower costs, as well as strong demand for NPP product bodes well for long-term investors. Hence, it would be better for investors who already own the stock to remain invested.
However, weakness in the commercial business is a near-term headwind.
Daktronics currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point in the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.