DAKT - Daktronics: Strong Growth Outlook But Weak Bottom-Line Margins

2024-04-26 15:08:09 ET

Summary

• Daktronics past financials have shown robust revenue recovery from the impact of COVID-19. Although margins recovered in 2023, they have yet to reach pre-pandemic levels.
• Looking ahead, the global LED video display market is expected to grow to $20.8 billion by 2027. This positive outlook is expected to bolster Daktronics' growth.
• Despite the positive growth drivers, Daktronics' net income margin and free cash flow are low, posing a risk in challenging economic conditions.

Synopsis

Daktronics ( DAKT ) specializes in the design and manufacture of electronic scoreboards, programmable display systems, and large-screen video displays. DAKT’s historical financials have shown a robust recovery from the impact of the COVID-19 pandemic. Additionally, its margins in 2023 also recovered, but it has yet to reach back to 2021’s level. For the third quarter, net sales decreased because of a tough comparison period. On a brighter note, 3Q24’s margins expanded year-over-year. Looking ahead, the global LED video display market is expected to grow to $20.8 billion by 2027. This growth is supported by robust growth in the Asia-Pacific, Americas, Europe, and Middle East and Africa regions. The expected robust growth in Americas will support DAKT’s growth as most of its revenue is from that region....

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