Daktronics, Inc. (DAKT) - Due Diligence

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65OpportunityDD: Sep 10, 2026Analyst: 73

paidPrice at analysis date

USD 19.1 (10/09/2026)

domainMkt cap

$916.1M

pie_chartShares

candlestick_chart52W

trending_downShort interest

5.07%

INFONASDAQElectronic Equipment & Instruments2700 employeesFounded 1968

Verdict: Attractive - quality execution, lower normalized forecast

Daktronics remains an attractive small-cap industrial-technology setup after Q1 FY2027: sales grew 7.1% despite one fewer week, operating margin reached 10.6%, simple free cash flow was $27.3M, and net cash expanded to roughly $144M. However, the Q1 beat should not be annualized: updated FY2027 consensus is near $897M revenue, $98.7M EBITDA and $1.21 adjusted EPS. On that normalized base, fair value is $24.60, implying 29.1% upside from the $19.05 close, with order timing and the SEC/NBA information requests limiting the multiple.

DIANALITICS RESEARCH INDEX

Score /100 - updated 2026-09-10

Daktronics, Inc. (DAKT)

Technology hardware / large-format LED display systems

Net cash, backlog and credible FY2028 targets support quality status, but normalized FY2027 consensus is materially below a straight Q1 annualization. The discount to higher-quality industrial-technology peers reflects project timing, weaker orders, input costs, headline risk and limited recurring-software disclosure.

Fin. strength

/20 pts

EBITDA/FCF

/15 pts

Debt/leverage

/15 pts

Stage/business

/15 pts

Catalysts

/10 pts

Reg. risk

/8 pts

Risk/reward

/7 pts

Management

/5 pts

Sector/macro

/3 pts

Compliance

/2 pts

Q1 operating margin 10.6% net cash ~$144M $311M backlog orders timing dip SEC/NBA information request

Fair value bridge - EV/EBITDA plus net cash

Fair value base case

USD 24.6

Range: USD 17.0-USD 32.0

Price at analysis date: USD 19.1 (10/09/2026)

Base upside/downside: +29%

five-unit SOTP using $98.65M FY2027 consensus EBITDA, Q1 revenue mix as the allocation proxy, unit-specific multiples, current net cash and an explicitly probability-weighted event reserve. Cross-check: consolidated 10.5x EBITDA plus net cash and the same adjustments gives approximately $24.7/share. Each 1.0x change in the consolidated multiple changes value by about $2.05/share. Not investment advice.

Component	Assumption	USD/share
Live Events EV	36.8% of $98.65M EBITDA x 11.0x / 48.09M shares	+8.30
Commercial EV	18.6% of $98.65M EBITDA x 10.0x / 48.09M shares	+3.82
High School Park & Recreation EV	23.3% of $98.65M EBITDA x 10.0x / 48.09M shares	+4.78
Transportation EV	9.1% of $98.65M EBITDA x 11.5x / 48.09M shares	+2.15
International EV	12.1% of $98.65M EBITDA x 9.5x / 48.09M shares	+2.36
Net cash	($154.6M cash - $10.6M gross debt) / 48.09M shares	+2.99
SEC/NBA expected-cost reserve	20% probability x $50M modeled exposure / 48.09M shares	-0.21
MicroLED / software option	$20M probability-weighted option value / 48.09M shares	+0.42
FV base case	Explicit sum, rounded: $8.30 + $3.82 + $4.78 + $2.15 + $2.36 + $2.99 - $0.21 + $0.42	24.60

Bull

$30-$32

Probability: 25%

Delayed orders convert, revenue exceeds $920M, EBITDA reaches $110M-$115M, buybacks continue and the information requests remain non-enforcement matters.

Base

$24-$26

Probability: 50%

Revenue is near $897M, EBITDA is about $99M, adjusted EPS is near $1.21 and the weighted SOTP multiple settles near 10.4x.

Bear

$17-$19

Probability: 25%

Orders remain weak, EBITDA falls toward $80M, working capital absorbs cash, input costs rise, or the information requests escalate into a quantified enforcement or litigation matter.

Methodology: five-unit SOTP using $98.65M FY2027 consensus EBITDA, Q1 revenue mix as the allocation proxy, unit-specific multiples, current net cash and an explicitly probability-weighted event reserve. Cross-check: consolidated 10.5x EBITDA plus net cash and the same adjustments gives approximately $24.7/share. Each 1.0x change in the consolidated multiple changes value by about $2.05/share. Not investment advice. Not investment advice.

warning

New headline overhang - SEC and NBA information requests

During the Q1 FY2027 call, management addressed media coverage around the NBA investigation involving Kawhi Leonard and the Los Angeles Clippers and said Daktronics had received information requests from the NBA and that the SEC was seeking information concerning the company and Mr. Leonard. This is not yet a quantified financial liability, but it is now material enough to lower the governance/compliance score and add a specific fair-value reserve.

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Positive update - Q1 beats the quality screen

Q1 FY2027 sales were $234.6M, operating income was $24.9M, EPS was $0.40 and EBITDA was $29.6M. Operating cash flow was $31.4M and capital expenditure was $4.1M, implying simple free cash flow of $27.3M. Cash rose to $154.6M against $10.6M gross debt, and the company repurchased 225.5K shares for $4.4M at a $19.56 VWAP under the $40M authorization approved in June 2026.

Reconciliation versus the August 7 DD: The Q1 figures are legitimate new information: cash increased from $131.6M to $154.6M, net cash from $120.8M to $144.0M, and backlog moved from the FY2026 year-end $356.2M to $311.3M. The prior September draft was wrong to extrapolate the strong quarter into $910M-$930M revenue and $1.45-$1.60 EPS. This revision uses post-Q1 consensus near $897.1M revenue, $98.7M EBITDA and $1.21 adjusted EPS, while separately retaining management's FY2028 targets.

Capital Structure - Short Interest - Buyback & Dilution

Short Interest

5.07%

2.34M shares short as of Aug. 14, 2026, equal to about 5.07% of public float. Moderate pressure, not the primary thesis.

Share dilution (1Y)

-1.6%

Diluted share count fell from 49.7M in Q1 FY2026 to 48.9M in Q1 FY2027, helped by repurchases.

Buyback

$40M

Authorization approved in June 2026; $4.4M used in Q1 at a $19.56 VWAP.

Short Interest - context

DAKT - 5.07%

5.07%

Short interest sits just above the moderate threshold. The cleaner signal is balance-sheet strength: $154.6M cash, $10.6M gross debt, no advances on the loan portion of the credit facility, and a 2.2x working-capital ratio.

$Financial analysis - FY2024 to FY2027E

Q1 FY2027 sales

$234.6M

+7.1% YoY, one fewer week

Operating margin

10.6%

aligned with FY2028 target band

Backlog

$311.3M

down YoY, still >$300M

Net cash

$144.0M

cash $154.6M less gross debt $10.6M

Item	FY2024	FY2025	FY2026	FY2027E	Guidance / basis
Revenue	$818.1M	$756.5M	$838.7M	~$897.1M	Post-Q1 consensus; range ~$894.1M-$898.9M
Operating margin	10.6%	4.4%	7.3%	~8.1%	Implied by ~$72.6M consensus EBIT on ~$898.8M revenue
EBITDA	N/D	N/D	~$80M	~$98.7M	Post-Q1 consensus; Q1 actual was $29.6M
EPS	$0.77	-$0.21	$0.92	~$1.21 adjusted	Post-Q1 consensus range $1.17-$1.25; not GAAP-comparable
Free cash flow	$63.2M	$78.5M	$34.9M	$50M-$65M model	Q1 simple FCF $27.3M; project working capital remains volatile

FY2027E revenue, EBITDA, EBIT and adjusted EPS are post-Q1 market consensus, not company guidance. Free cash flow is the DD model range. Management's formal long-term framework is for FY2028: 7%-10% revenue CAGR, 10%-12% operating margin and 17%-20% ROIC.

Quarterly dynamics - last 5 quarters
Metric	FQ1 2026	FQ2 2026	FQ3 2026	FQ4 2026	FQ1 2027
Revenue ($M)	219.0	229.3	181.9	208.6	234.6
Gross margin %	29.7%	27.0%	24.0%	28.0%	30.5%
Net income ($M)	16.5	17.5	3.0	8.4	19.4
Cash EOP ($M)	136.9	149.6	144.4	131.6	154.6

Backlog / TTM revenue

36%

Net cash / market cap

15.8%

Q1 simple FCF margin

11.6%

account_tree

Business model - engineered display systems

The quality case is execution, not a one-quarter beat

Daktronics sells large-format LED video displays, scoreboards, transportation displays, digital billboards, control systems and services. The case rests on backlog durability, value-based pricing, Mexico manufacturing ramp, microLED product development and disciplined capital allocation. The weakness is that orders, installations and cash conversion remain project-timing dependent.

Live Events $86.4M Q1 FY2027 (36.8% rev) ramping College and professional sports venues remain the flagship market. Q1 sales rose 8.3%, but orders fell after a very strong prior-year comparison. Commercial $43.7M Q1 FY2027 (18.6% rev) mixed Digital billboards, business displays and out-of-home demand. Q1 sales declined 5.3%, while orders rose 5.3%. High School Park & Recreation $54.7M Q1 FY2027 (23.3% rev) timing School and municipal scoreboards/video. Sales fell 7.8% due to project timing, but this remains a recurring replacement-cycle market. Transportation $21.4M Q1 FY2027 (9.1% rev) strong Transit, airport and intelligent-transportation display systems. Q1 sales rose 29.0% and orders rose 3.6%. International $28.4M Q1 FY2027 (12.1% rev) strong Stadium and commercial projects outside the U.S. Q1 sales rose 66.1%, helped by large project completions. Software / microLED option ~$1M quarterly microLED spend disclosed option value Camino 8 and microLED can improve mix, but the company does not yet disclose enough recurring software economics for a software multiple.

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Legal, regulatory and risk analysis

SEC/NBA request

High

Management confirmed information requests connected to media coverage of the Clippers/Kawhi Leonard matter. No liability is quantified, but unresolved regulatory attention can compress the multiple.

Orders timing

Moderate

Q1 orders declined 19.6% year over year. Management said a few substantial orders negotiated in Q1 should book in Q2; failure to convert would weaken the backlog thesis.

Input costs / tariffs

Moderate

Tariff refunds helped Q1, while RAM and other price-sensitive inputs pressured cost of goods. Margin quality needs confirmation after refunds normalize.

Working capital

Moderate

Accounts receivable rose to $154.7M from $118.6M at fiscal year-end. Cash conversion is strong in Q1, but project billing and collections can swing materially.

Balance sheet

Positive

$154.6M of cash against $10.6M gross debt materially reduces financial risk and supports buybacks plus organic investments.

Margin framework

Positive

Q1 operating margin of 10.6% already sits inside the FY2028 target range of 10-12%, though one quarter is not enough to re-rate the full business.

Insider transactions

Low

Recent Form 4 activity includes awards/acquisitions; no recent insider sale above the $500K threshold was verified in current 2026 filings reviewed.

Activist governance

Moderate

The Alta Fox cooperation agreement improved oversight and capital allocation discipline, but it also signals that public-market pressure remains part of the governance backdrop through the 2027 annual meeting.

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SWOT analysis

Strengths

+Net cash balance sheet with no revolver draw.
+Q1 FY2027 operating margin already at 10.6%.
+Backlog above $300M for six consecutive quarters.
+Buyback program active below base fair value.

Weaknesses

−Q1 orders down 19.6% year over year.
−Project timing makes quarterly results noisy.
−CFO role remains interim.
−Recurring software economics remain under-disclosed.

Opportunities

→Q2 order catch-up from delayed purchase orders.
→Mexico manufacturing ramp and automation can lift margin durability.
→MicroLED and Camino 8 can expand addressable markets.
→Investor Day targets create measurable re-rating milestones.

Threats

!SEC/NBA information request escalates into enforcement or litigation.
!RAM/component inflation offsets tariff refunds.
!Large projects slip or customer budgets soften.
!Working capital absorbs free cash flow during growth.

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Summary by assessment area

Financial quality - strong

Q1 margins, cash flow and net cash remain high quality.
Balance sheet provides real downside support.

Valuation - attractive

$24.60 base FV implies 29.1% upside.
The model is below Street targets because it normalizes Q1 and discounts order and event risk.

Execution - watch Q2

Q2 must validate delayed order conversion.
SEC/NBA updates can dominate fundamentals if escalated.

Sources & Disclaimer

Sources: Daktronics Q1 FY2027 release and Form 10-Q dated Sep. 2, 2026; Daktronics FY2026 release dated Jun. 24, 2026; FY2026 Form 10-K; Sep. 1, 2026 Form 8-K; StockAnalysis DAKT price, statistics and post-Q1 forecast pages; Investing.com DAKT quote page; MarketScreener FY2027 consensus; MarketBeat short-interest history; Q1 FY2027 call transcript. Price line used: DAKT $19.05 close on Sep. 9, 2026, cross-checked against StockAnalysis and Investing.com; 48.09M shares imply a $916.1M market capitalization, matching the quoted $916.16M. Consensus data are market estimates, not company guidance. This document is for informational purposes only and does not constitute financial or investment advice.