Last update on 2024-06-07

Daktronics (DAKT) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

Piotroski F-Score analysis for Daktronics (DAKT) in 2023 shows a strong score of 7/9, indicating good financial health and investment potential.

Short Analysis - Piotroski Score: 7

We're running Daktronics (DAKT) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score evaluates a company's financial position on a scale of 0 to 9, based on 9 criteria related to profitability, liquidity, and operating efficiency. Daktronics (DAKT) has scored 7 out of 9 on this scale for 2023, indicating a strong financial position but with some areas needing improvement. Profitability: Daktronics showed a positive net income of $6.8 million and a positive cash flow from operations. The return on assets has grown significantly, and the operating cash flow is higher than net income, pointing to operational efficiency. Liquidity: However, the company's leverage has increased, going from zero in 2022 to 0.0379 in 2023, and the number of outstanding shares has also increased. Despite these shortcomings, the current ratio has grown, indicating better liquidity to cover short-term liabilities. Operating Efficiency: The company enjoys a higher gross margin and an improved asset turnover ratio, demonstrating better efficiency and asset utilization in generating sales.

Insights for Value Investors Seeking Stable Income

Given Daktronics' high Piotroski score of 7, the company currently demonstrates strong profitability and operational efficiency but has some concerns with leverage and share dilution. For an investor, Daktronics (DAKT) appears to be a worthy consideration as its financial health is generally robust. However, it is advisable to monitor the company's leverage and share issuance trends closely. If these concerns are addressed, Daktronics has the potential to be a solid investment.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Daktronics (DAKT)

Company has a positive net income?

Net income is the total profit of a company after all expenses, taxes and costs have been deducted from total revenue. It is crucial in evaluating the company's profitability.

The net income for Daktronics (DAKT) in 2023 is $6,802,000, which is indeed positive. Thus, one point is awarded under the Piotroski F-Score for this criterion. Historically, Daktronics has shown volatile net income figures, reaching a peak in 2008 with $26,428,000 and a trough in 2010 with a negative $6,989,000. The fluctuating net income over the last 20 years reveals periods of both remarkable growth and significant setbacks, suggesting that while the recent positive net income is a good sign, it should be contextualized within the broader trend of inconsistency.

Company has a positive cash flow?

Cash Flow from Operations (CFO) reflects a company's ability to generate cash from its core business operations, which is critical for maintaining liquidity and funding ongoing activities. Positive CFO typically indicates a healthy, operationally efficient company.

For 2023, Daktronics (DAKT) has a Cash Flow from Operations (CFO) of $15,024,000. This figure is indeed positive, earning the company a point according to the Piotroski criteria. Over the past 20 years, the company has generally maintained a positive CFO, with a significant dip in 2022 when it fell to -$27,035,000. The rebound to $15,024,000 in 2023 suggests a notable improvement in operational cash generation, signaling that Daktronics has managed to overcome recent operational challenges.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) is a critical metric in assessing a company's profitability and management efficiency. Evaluations over a multi-year span provide deep insights.

Comparing the ROA of Daktronics, Inc. (DAKT), we see that in 2023, the ROA is 0.015, and in 2022, it was 0.0015. This signifies a considerable increase, resulting in scoring 1 point based on the Piotroski criterion. Over the past two decades, Daktronics has struggled with Roller-coaster ROA changes. In contrast, the industry median has remained quite robust, around 0.35-0.45.

Operating Cashflow are higher than Netincome?

Operating cash flow being higher than net income is an essential indicator because it shows the company's ability to generate sufficient cash to fund operations, service debts, and undertake new investments without relying on external financing.

For Daktronics (DAKT) in 2023, the Operating Cash Flow stands at $15,024,000 compared to the Net Income of $6,802,000. This is a positive indicator, resulting in a Piotroski score of 1 for this criterion. The trend signifies that the company is doing well in managing its cash flows and is in a robust position to cover its operational costs. Historically, operating cash flow figures for Daktronics have demonstrated fluctuations, with peak values as high as $66,212,000 in 2021 and a low of -$27,035,000 in 2022. The company's capability to generate positive operating cash flow in the latest year is a reassuring sign, especially given the volatility seen in 2022.

Liquidity of Daktronics (DAKT)

Leverage is declining?

Change in Leverage: The Piotroski score assigns a point if the company's leverage has decreased, indicating financial stability and reduced risk.

The leverage for Daktronics (DAKT) has increased from 0 in 2022 to 0.0379 in 2023. This indicates a worsening financial position in terms of debt. Reviewing the leverage data for the last 20 years shows that this increase is unusual after almost two decades of minimal to zero leverage. The last comparable leverage rate was in 2003, and it had been 0 for many consecutive years since then. Therefore, Daktronics does not earn a point for leverage in this year's Piotroski analysis due to the increase in leverage.

Current Ratio is growing?

Assessing the shift in the Current Ratio for Daktronics (DAKT) and why it holds significance

The Current Ratio for Daktronics in 2023 stands at 1.6304, marking an increase from the 1.4861 reported in 2022. An improvement in the Current Ratio is generally perceived as beneficial since it suggests that the company has more readily available assets to cover its short-term liabilities. Hence, an increase in the Current Ratio warrants an incremental 1 point for the analysis. Reflecting on the historical data, Daktronics' Current Ratio has seen fluctuations over the past two decades, dipping to a low of 1.4356 in 2007 and achieving highs of over 2. Throughout this period, Daktronics' ratios have usually been in close tandem with the industry median, albeit with occasional deviations. For instance, the 2022 ratio of 1.4861 trailed the industry median of 2.2223. The year-over-year augmentation from 2022 to 2023 to 1.6304 indicates a bolstered position of liquidity relative to the industry median's slight uptick to 2.3065. This trajectory underpins a positive shift, echoing more immediate asset safety for Daktronics amidst its industry peers.

Number of shares not diluted?

The criterion assesses whether there has been a decrease in the number of outstanding shares, indicating share buybacks, which can be a positive sign for investors as it often suggests the company's confidence in its future prospects.

For Daktronics (DAKT), the number of outstanding shares has increased from 45,188,000 in 2022 to 45,404,000 in 2023. This represents an increase of 216,000 shares. Based on the Piotroski Analysis criterion, this is seen as a negative signal and thus scores 0 points. Historically, Daktronics' outstanding shares have generally shown an upward trend over the past 20 years, peaking at 45,404,000 in 2023. This consistent increase might indicate frequent stock issuances, potentially diluting existing shareholders' value. Therefore, the upward trend in outstanding shares for 2023 is not favorable under the Piotroski scoring model.

Operating of Daktronics (DAKT)

Cross Margin is growing?

This criterion examines whether the company’s gross margin has improved. A higher gross margin indicates better efficiency in producing goods or services.

Daktronics' Gross Margin for 2023 stands at 20.07%, up from 19.1% in 2022. This increase marks a positive trend, suggesting improved efficiency in production or services. Over the past 20 years, the company's gross margin peaked at 34.53% in 2004 and experienced a significant decline afterward. Despite this historical downward trend, the recent improvement highlights that the company might have undertaken measures to enhance its operational efficiency. Compared to the industry median, Daktronics’ gross margin has consistently lagged, with the industry median standing at 35.01% in 2023. Nevertheless, the improvement from 2022 to 2023 is encouraging, granting Daktronics an additional point in the Piotroski analysis.

Asset Turnover Ratio is growing?

Asset Turnover is calculated by dividing sales by average total assets. It measures how efficiently a company uses its assets to generate sales. A higher ratio indicates better performance.

From 2022 to 2023, Daktronics' Asset Turnover increased from 1.4974 to 1.6594. This indicates improved efficiency in utilizing assets to generate revenue, which is a positive trend. Historically, Daktronics has seen fluctuations, peaking at 1.8792 in 2009 and hitting a low of 1.2468 in 2010. The current rise points to the company's resilience and effective asset management amidst changing conditions. Hence, Daktronics scores 1 point for this criterion.