Value
8.3/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 6.5 |
| P/S | 9.6 |
| EV/EBITDA | 5.9 |
| Fwd P/E | 8.5 |
| PEG | 9.2 |
| Analyst target | 9.0 |
- ▸Forward P/E: 13.4x
- ▸PEG: 0.64
- ▸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 score5.8/10
ConfidenceMEDIUM
MacroRISK_OFF
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.
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. | Tripped→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. | ↓Deteriorating |
| 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. | ↑Improving |
| 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. | ↓Deteriorating |
| 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.
Tripped→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.
↓DeterioratingGrowth 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.
↑ImprovingBear 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.
↓DeterioratingCatalyst 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.
Per-dimension breakdown
Quality
4.9/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 5.4 |
| ROA | 4.5 |
| Gross margin | 1.5 |
| Op margin | 4.3 |
| Net margin | 2.8 |
| Current ratio | 7.5 |
| FCF quality | 2.9 |
| Moat | 6.2 |
| Piotroski F | 8.9 |
- ▸Earnings quality RED FLAG: 36% FCF/NI
- ▸Strong Piotroski F-Score: 8/9
Growth
5.2/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.3 |
| EPS growth | 6.2 |
Momentum
4.6/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 6.1 |
| OBV | 1.0 |
| MA position | 5.2 |
| Volume | 6.3 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA but MA still rising (+0.5%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 5.3 |
| Analyst rating | 6.8 |
| Price target | 9.8 |
- ▸Light analyst coverage (3.0) — signal dampened
- ▸Analyst upside: 63%
Insider
4.2/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 4.7 |
| notable moves | 3.0 |
- ▸Insider selling (low materiality) — $149,636 (0.016% of mkt cap)
Peer rank
5.6/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 8.7 |
| quality rank | 5.4 |
| growth rank | 1.4 |
- ▸Attractive P/E vs peers
Technical
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 4.9 |
| support resistance | 7.4 |
| 52w position | 3.9 |
Risk (lower is worse)
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.4 |
| days to cover | 4.9 |
| volatility | 4.2 |
| put call | 10.0 |
| implied vol | 3.7 |
| max pain risk | 7.0 |
| beta | 4.4 |
| debt equity | 9.8 |
- ▸Concentration risks: 2 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 5.6 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| news activity | 7.0 |
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- MOMENTUM:4.6>=4.5
- ASYMMETRY:5.8>=1.5
- INSIDER:OK
- EARNINGS_PROXIMITY:90d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (0)
none
Warning (2)
- MOMENTUM:4.6<5.5 (soft — BUY_NOW allowed but watch)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
5.77
Upside
+38.3%
Downside
6.6%
Sizing output
AVOID
SetupRange Bound — RSI 54 mid-range, Bollinger mid-band
EdgeInst Constrain — Small cap ($0.9B) below institutional reach
SuitabilityAggressive — Beta 1.68>1.3, MCap $0.9B<$5B
Investment implication
The F-path SELL output reflects an overall score of 4.5 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Value at 8.3) was not enough to lift the adjusted overall above the threshold. Current asymmetry R:R is 5.77 — supplementary context, not the trigger for this path.
The strongest dimensions are Value at 8.3, Sentiment at 7.2, and Catalyst at 6.5; the weakest are Insider at 4.2, Momentum at 4.6, and Quality at 4.9. The V9 engine cleared all gates with 2 warnings, producing an asymmetric reward-to-risk of 5.77 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 UpsideTripped
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.