Daktronics, Inc. (DAKT) DCF Valuation & Fundamental Primer
Daktronics, Inc. (DAKT) currently trades at $20.30 with an enterprise value of $373.8M. Our proprietary institutional model rates Daktronics, Inc. at 66/100 (Grade: B+ · Quality Software Operator). The current market price prices in an implied 5-year revenue CAGR of 39.5% vs. historical growth of 14.6% (Aggressive Growth Expectations Priced In).
Institutional fundamental teardown of Daktronics, Inc. (DAKT) covering SEC 10-K/10-Q cash flow conversion, SBC dilution friction, and Reverse-DCF valuation hurdles.
Daktronics, Inc. (DAKT) 3-Scenario DCF Valuation Range
Stress-test DAKT's 5-year growth, target FCF margin, WACC, terminal methodology, and SBC/dilution friction in real time.
Split between 5-Year Explicit Cash Flows and Discounted Terminal Value
2D Institutional Valuation Sensitivity Heatmap
Implied share price & upside/downside spread across 25 valuation states (Current Price: $20.30).
| WACC \ Terminal | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $9.81 -52% | $10.35 -49% | $10.97 -46% | $11.71 -42% | $12.60 -38% |
| 9.3% | $8.94 -56% | $9.36 -54% | $9.85 -51% | $10.41 -49% | $11.07 -45% |
| 10.0% | $8.22 -60% | $8.56 -58% | $8.95 -56% | $9.39 -54% | $9.89 -51% |
| 10.8% | $7.62 -62% | $7.90 -61% | $8.21 -60% | $8.56 -58% | $8.96 -56% |
| 11.5% | $7.11 -65% | $7.34 -64% | $7.60 -63% | $7.88 -61% | $8.20 -60% |
Institutional Software Quality Scorecard (66/100 · Grade B+)
Solid software model with clear operating leverage, partially offset by standard SBC or moderate burn.
Positive FCF but lower conversion efficiency due to capex or timing
Standard software SBC dilution; modest equity transfer to employees
Solid gross margins with potential for operating leverage at scale
Positive net cash cushion; self-funding operations with zero insolvency risk
Core Investment Strengths & Moats
- Net cash positive: $61.7M balance sheet buffer
Key Operational & Dilution Risks
Reverse-DCF Solver: What Growth is Priced Into DAKT?
The current share price demands 39.5% 5-year CAGR (59.1% net of SBC & dilution)—a +24.9% acceleration over historical run-rate (14.6%). Any growth slowdown risks valuation multiple contraction.
Headline Reverse-DCF ignores Stock-Based Compensation (9.7% of revenue) and annual share dilution (1.8%/yr). Accounting for both requires 59.1% 5-year revenue CAGR to justify $20.30/sh on a true per-share economic cash flow basis.
Daktronics, Inc. (DAKT) 5-Year Fundamental Forecast
| Statement Line Item | TTM Audited Base | TTM | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|---|---|
| Revenue | $141.2M | $141.2M | $161.8M | $185.4M | $212.5M | $243.5M | $279.1M |
| Gross Profit | $103.9M | $103.9M | $119.1M | $136.5M | $156.4M | $179.2M | $205.4M |
| Operating Income (EBIT) | $-3.5M | $-3.5M | $-4.0M | $-4.6M | $-5.3M | $-6.1M | $-7.0M |
| Stock-Based Compensation (SBC) | $13.7M | $13.7M | $15.7M | $18.0M | $20.6M | $23.6M | $27.1M |
| Unlevered Free Cash Flow (FCF) | $16.7M | $16.7M | $19.1M | $21.9M | $25.1M | $28.7M | $32.9M |
| SBC-Adjusted True Cash Flow | $3.0M | $3.0M | $3.4M | $3.9M | $4.5M | $5.1M | $5.9M |
Software & Cloud Services Peer Comparables & Rule of 40 Regression
Rule of 40 vs. EV / Revenue Multiple Regression
OLS Fit: EV/Rev = -7.4 + 0.39 × (Rule of 40) · R² = 54%Stocks below the gold regression line trade at a discount relative to their Rule of 40 compounding efficiency.
| Company | Ticker | Market Cap | TTM Revenue | Gross Margin | FCF Margin | Rule of 40 | SBC % Rev | EV / Rev |
|---|---|---|---|---|---|---|---|---|
| Daktronics, Inc. | DAKT | $988.2M | $141.2M | 73.6% | 11.8% | 26.4% | 9.7% | 6.6× |
| ServiceNow | NOW | $152.61B | $10.98B | 79.2% | 31.1% | 54.2% | 15.9% | 13.9× |
| Workday, Inc. | WDAY | $50.35B | $8.00B | 75.0% | 27.4% | 43.9% | 19.0% | 6.4× |
| Salesforce | CRM | $217.10B | $37.90B | 77.2% | 32.8% | 42.8% | 8.4% | 5.8× |
| Datadog | DDOG | $46.05B | $2.68B | 80.8% | 31.1% | 57.7% | 21.3% | 17.4× |
| Snowflake Inc. | SNOW | $71.79B | $3.63B | 66.5% | 25.2% | 57.7% | 40.8% | 20.0× |
| Hubspot | HUBS | $19.89B | $2.63B | 85.0% | 21.3% | 52.7% | 19.2% | 7.7× |
| Peer Cohort Median Benchmark (N=6) | 78.2% | 29.2% | 53.5% | 19.1% | 10.8× | |||
EV / Revenue Multiple Compression Stress Test
| Multiple Scenario | EV / Revenue | Implied Enterprise Value | Implied Equity Value | Implied Share Price | Delta vs Current |
|---|---|---|---|---|---|
| Current Multiple | 6.6× | $926.5M | $988.2M | $20.30 | 0.0% |
| -20% Multiple Compression | 5.3× | $741.2M | $802.9M | $16.49 | -20.0% |
| -35% Multiple Compression | 4.3× | $602.2M | $663.9M | $13.64 | -35.0% |
| Software Baseline Floor (5.0× EV/Rev) | 5.0× | $705.9M | $767.6M | $15.77 | -23.8% |
Frequently Asked Questions: Daktronics, Inc. (DAKT) Valuation
What is Daktronics, Inc. (DAKT)'s intrinsic DCF valuation and implied share price?
Based on audited SEC 10-K/10-Q filings and a 5-year 3-statement discounted cash flow (DCF) model, Daktronics, Inc. (DAKT) has a Base Case implied value of $8.95 per share (with a Bear Case of $4.94 and a Bull Case of $14.11), compared to its current price of $20.30. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.
What is Daktronics, Inc. (DAKT)'s Rule of 40 score and Free Cash Flow margin?
Daktronics, Inc. achieves a Rule of 40 score of 26.4%, combining a 14.6% revenue growth run-rate with a 11.8% TTM free cash flow margin on $141.2M in trailing twelve-month revenue. In the Software & Cloud Services peer cohort, the median Rule of 40 benchmark is 53.5%.
What revenue growth rate is priced into DAKT stock according to Reverse-DCF analysis?
At $20.30 per share (Enterprise Value of $926.5M), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 39.5%, compared to Daktronics, Inc.'s historical CAGR of 14.6%. Overall market expectations are rated as "Aggressive Growth Expectations Priced In".
How does Daktronics, Inc. compare to Software & Cloud Services software peers?
Daktronics, Inc. (DAKT) earns an institutional Software Quality Score of 66/100 (Grade B+ — Quality Software Operator). Across its Software & Cloud Services peer group (NOW, WDAY, CRM, DDOG, SNOW), the cohort trades at a median EV/TTM Revenue multiple of 10.8× and a median gross margin of 78.2%.
How does Stock-Based Compensation (SBC) impact Daktronics, Inc. (DAKT)'s valuation?
Daktronics, Inc. recorded $13.7M in TTM stock-based compensation (9.7% of revenue). When treating SBC as a cash-equivalent compensation expense, Daktronics, Inc.'s SBC-adjusted free cash flow yield is 0.3%, scoring 16/25 on our Shareholder Dilution Friction pillar.