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Daktronics, Inc. (NASDAQ:DAKT), which is in the electronic business, and is based in United States, received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to $7.64 at one point, and dropping to the lows of $5.92. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Daktronics’s current trading price of $6.39 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Daktronics’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What is Daktronics worth?
Daktronics appears to be overvalued by 32.24% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$6.39 on the market compared to my intrinsic value of $4.83. This means that the buying opportunity has probably disappeared for now. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that Daktronics’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What kind of growth will Daktronics generate?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. However, with a relatively muted revenue growth of 9.0% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Daktronics, at least in the short term.
What this means for you:
Are you a shareholder? It seems like the market has well and truly priced in DAKT’s future outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe DAKT should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on DAKT for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Daktronics. You can find everything you need to know about Daktronics in the latest infographic research report. If you are no longer interested in Daktronics, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.