Is It Too Late To Consider Daktronics (DAKT) After Its Strong Multi‑Year Share Price Run?

• If you are trying to figure out whether Daktronics at around US$21.51 is a bargain or fully priced, you will want to look past the headlines and into how the market is really valuing the business.
• The share price return data is mixed in the short term, with a 0.8% decline over the last 7 days, a 16.0% gain over 30 days, and returns of 8.4% year to date and 26.0% over 1 year, alongside a very large 3 year gain that is close to 5x and a 5 year gain of 348.1%.
• These moves have put Daktronics on more investors' radars, prompting questions about whether the current price still reflects its fundamentals or if expectations have run ahead of the business. This is where a closer look at valuation methods, and how they line up with the company story, becomes especially useful.
• Right now, Daktronics has a valuation score of 0/6 on our checks for being undervalued. This raises some clear questions about what the market is pricing in and what might be missing. Next, we will walk through different valuation approaches to see what they suggest about the stock, then finish with a broader way to think about value that goes beyond any single model.

Daktronics scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Daktronics Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a company might be worth today by projecting its future cash flows and discounting them back to the present using a required rate of return.

For Daktronics, the model uses a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is about $60.8 million. Analysts have specific estimates out to 2027, including projected free cash flow of $47.1 million in 2027, and Simply Wall St extrapolates these further so that by 2035 the model is using a projected free cash flow figure of around $41.8 million.

When all those projected cash flows are discounted back and added up, the model arrives at an estimated intrinsic value of about $13.35 per share. Compared with the current share price of around $21.51, the DCF output indicates the stock is about 61.1% overvalued based on these assumptions.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Daktronics may be overvalued by 61.1%. Discover 872 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Daktronics.

Approach 2: Daktronics Price vs Earnings

For a profitable company, the P/E ratio is a straightforward way to think about what you are paying for each dollar of current earnings. It helps you compare the market’s implied expectations for one business with others that generate profits today, rather than focusing only on revenue or assets.

What counts as a “normal” P/E depends a lot on what investors expect for future growth and how risky they think those earnings are. Higher expected growth or lower perceived risk can support a higher P/E, while slower growth or higher uncertainty usually lines up with a lower one.

Daktronics is currently trading on a P/E of about 142.27x. That is well above the Electronic industry average P/E of 26.93x and also above the peer group average of 37.13x. Simply Wall St’s Fair Ratio framework estimates what a more tailored P/E might look like, given factors such as earnings growth, margins, industry, market cap and company specific risks. For Daktronics, the Fair Ratio is 66.28x, which is substantially below the actual P/E. On this measure, the stock screens as expensive relative to the level that Fair Ratio suggests could be more balanced.

Result: OVERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1427 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Daktronics Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way for you to attach a clear story about Daktronics to the numbers behind your own view of fair value, including your assumptions for future revenue, earnings and margins.

A Narrative connects three pieces in one place: the company story you believe in, the financial forecast that story implies, and an estimated fair value that falls out of those assumptions.

On Simply Wall St, Narratives live inside the Community page and are built to be easy to use. This means you can quickly see how your view compares with others and how each view links back to specific numbers rather than vague opinions.

Once you have a Narrative, the platform compares your Fair Value with the current Daktronics share price. This can help you decide whether it might be a time to hold off, build a position or consider trimming.

Narratives also update automatically when fresh information such as news or earnings is added to the platform, so your fair value view adjusts with the data instead of going stale.

For Daktronics, one investor might plug in very optimistic revenue and margin assumptions and reach a fair value far above US$21.51, while another uses more cautious inputs and lands on a fair value well below that price.

Do you think there's more to the story for Daktronics? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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