Episode Details

Daktronics (DAKT) Q1 FY2027 — The stock opened $21.50 and touched $21.82, then closed at $19.13 - down 1.2% from the $19.36 prior close - on 2.86 million shares against a roughly 470 thousand average. Daktronics posted its highest diluted EPS in twelve quarters, 40 cents against 33, on sales up 7.1% and a 10.6% operating margin. It also booked $191.8m of new orders against $234.6m of sales - a book-to-bill of 0.82 against 1.09 in the same quarter last year - and the product backlog fell $44.9m in thirteen weeks to $311.3m. The 10-Q states the mechanism in its own words: backlog fell on the conversion of existing backlog into revenue at a pace that exceeded order intake. THE CALL: HOLD (3/5, MODERATE) — base-case value ~$19.00 vs ~$19.13 today. KEY METRICS: - Net sales $234.6m, up 7.1%. Operating income $24.9m, up 7.2%. Net income $19.4m, up 18.0%. Diluted EPS $0.40 against $0.33, and it beat the $0.35 consensus. Highest quarterly EPS in twelve quarters - New orders $191.8m against $238.5m - down 19.6% - so book-to-bill was 0.82 against 1.09 in the same quarter last year. Daktronics shipped $42.8m more than it booked - Product backlog $311.3m, down $44.9m in the quarter and $49.0m year on year. Six consecutive quarter-ends above $300m, and this is the smallest of the six. Coverage fell from 1.65 quarters of shipping to 1.33 - Live Events, the largest unit at 37% of sales, shipped $86.4m and booked $47.2m - a 0.55 book-to-bill. Its $45.0m order decline is 96% of the $46.7m company total. Commercial, Transportation and International all booked MORE - 13 weeks against 14 last year, because FY2026 was a 53-week year. On a per-week basis sales rose 15.4% and orders fell 13.4% - a 28.8-point spread between selling and replacing - Gross margin 30.5% against 29.7%, and the gain includes tariff refunds the company does not size. Operating expense rose 11.6% on sales up 7.1%. Operating margin was 10.63% against 10.628% - flat - Pre-tax income rose $3.444m, of which $1.780m - 51.7% - came from below the operating line: interest income and a smaller FX loss. Effective tax rate 24.3% against 25.9% - Cash $154.6m against $10.6m of gross debt. Net cash $143.9m, 15.6% of market value. Operating cash flow $31.4m, free cash flow $27.5m. $4.4m of buybacks against $10.7m a year ago - Trailing twelve months: sales $854.3m, operating income $62.5m (7.3% margin), EPS $0.99. At $19.13 that is 19.3x earnings and 12.4x EV/EBIT on a $920m market value and $776m EV What to watch: Q2 new orders and closing backlog, in the same table of the early-December release. Above $235m of orders confirms the slipped-contract explanation. Below $200m for a second straight quarter, with backlog through $300m, and this was not timing Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.