Value
8.3/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 6.0 |
| P/S | 9.6 |
| EV/EBITDA | 5.5 |
| Fwd P/E | 8.5 |
| PEG | 9.9 |
| Analyst target | 9.0 |
- ▸Forward P/E: 13.6x
- ▸PEG: 0.51
- ▸Attractively valued
DAKT · Why this verdict
Why Daktronics (DAKT) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score6.2/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
A PEG of 0.54, a forward P/E of 17.6x, and 25% upside to the price target — with the broader analyst community pointing roughly 47% higher — provide a compelling value case for the growth rate on offer, and the risk/reward of roughly 3.6-to-1 is meaningfully favorable. Valuation breakdown | The stock closes at least half the gap to the price target within 12 months, implying a move above $23. | →Stable |
| CounterA large gap to consensus on a small-cap company with only three covering analysts can reflect a thin coverage base where each individual upgrade disproportionately moves the average, overstating the true market conviction behind the target. | ||
Revenue is growing at approximately 22% year-over-year, placing the company among the stronger growers in its segment, and free cash flow converts at 201% of net income, suggesting that the top-line growth is translating into real cash generation. Growth breakdown | Year-over-year revenue growth remains above 15% for the next two consecutive reporting periods. | →Stable |
| CounterOperating margins of only 1.1% mean the revenue growth is not yet translating into meaningful profitability; if margins do not expand alongside the top line, free cash flow generation can deteriorate quickly even with strong volume growth. | ||
A debt-to-equity ratio of 3.8 combined with operating margin compression to 1.1% creates a value-trap signal: the stock may appear inexpensive on earnings metrics while the thin operating cushion leaves limited room to absorb any revenue or cost shock before debt servicing becomes a constraint. Bear case | If this pillar is wrong and operational discipline improves, operating margins recover above 5% within 4 quarters, demonstrating that the compression is temporary and the leverage is manageable. | →Stable |
| CounterHigh leverage in a growth company with strong revenue momentum can be a rational use of the balance sheet if the capital is deployed into high-return opportunities; if returns on deployed capital prove strong, the leverage will look prudent in hindsight. | ||
Three of the last four quarters beat estimates — including three consecutive beats before the most recent quarter's miss — and earnings are due in 8 days, representing the next near-term test supported by a cluster of four analyst upgrades. Catalyst breakdown | The upcoming earnings report produces a positive EPS surprise above 10%, confirming the most recent miss was an isolated quarter and extending the beat pattern. | →Stable |
| CounterThe most recent quarter produced a miss of approximately -29%, breaking the prior streak; if execution challenges persist into this report, back-to-back misses would materially weaken the catalyst thesis before it can be validated. | ||
A PEG of 0.54, a forward P/E of 17.6x, and 25% upside to the price target — with the broader analyst community pointing roughly 47% higher — provide a compelling value case for the growth rate on offer, and the risk/reward of roughly 3.6-to-1 is meaningfully favorable.
→StableValuation breakdown
- Expectation
- The stock closes at least half the gap to the price target within 12 months, implying a move above $23.
CounterA large gap to consensus on a small-cap company with only three covering analysts can reflect a thin coverage base where each individual upgrade disproportionately moves the average, overstating the true market conviction behind the target.
Revenue is growing at approximately 22% year-over-year, placing the company among the stronger growers in its segment, and free cash flow converts at 201% of net income, suggesting that the top-line growth is translating into real cash generation.
→StableGrowth breakdown
- Expectation
- Year-over-year revenue growth remains above 15% for the next two consecutive reporting periods.
CounterOperating margins of only 1.1% mean the revenue growth is not yet translating into meaningful profitability; if margins do not expand alongside the top line, free cash flow generation can deteriorate quickly even with strong volume growth.
A debt-to-equity ratio of 3.8 combined with operating margin compression to 1.1% creates a value-trap signal: the stock may appear inexpensive on earnings metrics while the thin operating cushion leaves limited room to absorb any revenue or cost shock before debt servicing becomes a constraint.
→StableBear case
- Expectation
- If this pillar is wrong and operational discipline improves, operating margins recover above 5% within 4 quarters, demonstrating that the compression is temporary and the leverage is manageable.
CounterHigh leverage in a growth company with strong revenue momentum can be a rational use of the balance sheet if the capital is deployed into high-return opportunities; if returns on deployed capital prove strong, the leverage will look prudent in hindsight.
Three of the last four quarters beat estimates — including three consecutive beats before the most recent quarter's miss — and earnings are due in 8 days, representing the next near-term test supported by a cluster of four analyst upgrades.
→StableCatalyst breakdown
- Expectation
- The upcoming earnings report produces a positive EPS surprise above 10%, confirming the most recent miss was an isolated quarter and extending the beat pattern.
CounterThe most recent quarter produced a miss of approximately -29%, breaking the prior streak; if execution challenges persist into this report, back-to-back misses would materially weaken the catalyst thesis before it can be validated.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Daktronics combines a beat-heavy earnings track record, strong revenue growth of 22% year-over-year, and 25% upside to the price target with a 3.6-to-1 favorable risk/reward — the near-term case is reinforced by earnings due in 8 days and a cluster of four analyst upgrades; the primary risk is operating margin compression to 1.1% and financial leverage at 3.8 times debt-to-equity that leave a thin cushion against any revenue or cost shock.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
4.3/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 5.3 |
| ROA | 4.8 |
| Gross margin | 1.5 |
| Op margin | 2.7 |
| Net margin | 2.7 |
| Current ratio | 7.9 |
| FCF quality | 0.8 |
| Moat | 5.4 |
| Piotroski F | 7.8 |
- ▸Earnings quality RED FLAG: 10% FCF/NI
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 7/9
Growth
7.7/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 7.7 |
- ▸Strong growth: 21% YoY
Momentum
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 3.2 |
| OBV | 10.0 |
| MA position | 4.2 |
| Volume | 3.2 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA but MA still rising (+1.7%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
8.2/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 8.5 |
| Analyst rating | 6.8 |
| Price target | 9.6 |
- ▸LLM news sentiment: +0.70 (n=1)
- ▸Light analyst coverage (3.0) — signal dampened
- ▸Analyst upside: 54%
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸Negligible insider buying — $1,565 (0.000% of mkt cap)
Peer rank
5.7/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 8.5 |
| quality rank | 5.9 |
| growth rank | 7.2 |
- ▸Attractive P/E vs peers
Technical
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 5.1 |
| support resistance | 6.7 |
| 52w position | 4.1 |
| gap | 5.0 |
Risk (lower is worse)
2.5/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.5 |
| days to cover | 3.3 |
| volatility | 0.0 |
| put call | 0.0 |
| implied vol | 2.5 |
| beta | 4.5 |
| debt equity | 0.0 |
- ▸Elevated put/call: 2.27
- ▸High IV: 65%
Catalyst
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| news activity | 5.0 |
- ▸Strong earnings: 3B/1M
How the verdict was assembled
Engine trigger
Extreme risk factors.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (8)
- MOMENTUM:5.0>=4.5
- ASYMMETRY:3.0>=1.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_BOOST:ANALYST:0.70
- EARNINGS_PROXIMITY:69d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (0)
none
Warning (1)
- MOMENTUM:5.0<5.5 (soft — BUY_NOW allowed but watch)
Reward-to-Risk
3.04
Upside
+30.9%
Downside
10.2%
Sizing output
AVOID
SetupRange Bound — RSI 41 mid-range, Bollinger mid-band
EdgeInst Constrain — Small cap ($1.0B) below institutional reach
SuitabilityAggressive — Beta 1.66>1.3, MCap $1.0B<$5B
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Value at 8.3 could not lift the engine output above the verdict floor.
The strongest dimensions are Value at 8.3, Sentiment at 8.2, and Growth at 7.7; the weakest are Risk (lower is worse) at 2.5, Quality at 4.3, and Insider at 5.0. The V9 engine cleared all gates with 1 warning, producing an asymmetric reward-to-risk of 3.04 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Near Term Earnings Catalyst
Trip ifEPS surprise falls below -15% for 2 consecutive quarters.
- P2Attractive Valuation With Large Upside
Trip ifAnalyst consensus price target falls below $23, reducing implied upside from the current price to less than 10%.
- P3Strong Revenue Growth Momentum
Trip ifRevenue growth falls below 10% year-over-year for 2 consecutive quarters.
- P4Leverage And Margin Compression Risk
Trip ifOperating margin recovers above 5% for 2 consecutive quarters, indicating the margin compression thesis has resolved.