Daktronics, Inc. (NASDAQ:DAKT) Order Book Strong


Three months ago, Daktronics, Inc. (NASDAQ:DAKT) missed the analysts first quarter estimates with the indication of a strong order book following which it declined over 25%. The company has now provided with a 2Q update wherein revenue billings declined 9% YOY to $158 million. The GAAP earnings dropped from $0.18 per share to $0.07 a share. It is evident that the financial numbers for 2Q were far below analyst projections of earnings of $0.19 per share and revenue of nearly $175 million.

The performance

Daktronics, Inc. (NASDAQ:DAKT) stock price had been surging up from the first-quarter decline, but eroded all of the quarter’s gains on last Tuesday.The stock declined as much as 29% before recovering marginally and closing the session with loss of 20%. So, the stock is once again making new multiyear lows. Year to date, the stock price of Daktronics have declined nearly 36% lower, while the shareholders take just 4% dividend yield from the firm.

The low revenue figure was a result of softness in the commercial divisions and live events. In the commercial division, Daktronics indicated lower demand for billboards and mentioned the timing of some one-time “spectaculars” revenue. It suggested that unique display products are targeted for holiday parades and similar events. These are grave concerns, and analysts’ will closely watch how the company performs in holiday season.

The expert view

Reece Kurtenbach, the CEO of Daktronics, Inc. (NASDAQ:DAKT), said that since they could maintain delivery promises to clients, they decided to postpone production in the second quarter to take benefit of new designs with improved reliability features and projected lower production costs. The company is compromising on short-term sales volume to fetch higher gross margins in coming period. When a single change can create a difference to the overall performance, selecting safety appears like a better choice.

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