Intrinsic value of Daktronics - DAKT

Previous Close

$9.28

  Intrinsic Value

$8.54

stock screener

  Rating & Target

hold

-8%

Previous close

$9.28

 
Intrinsic value

$8.54

 
Up/down potential

-8%

 
Rating

hold

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of DAKT stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.98
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  587
  599
  613
  628
  646
  666
  687
  710
  736
  763
  792
  824
  857
  893
  930
  971
  1,013
  1,058
  1,106
  1,156
  1,209
  1,265
  1,324
  1,387
  1,452
  1,521
  1,594
  1,671
  1,751
  1,836
  1,926
Variable operating expenses, $m
 
  119
  122
  125
  128
  132
  137
  141
  146
  152
  157
  163
  169
  176
  184
  192
  200
  209
  219
  228
  239
  250
  262
  274
  287
  301
  315
  330
  346
  363
  381
Fixed operating expenses, $m
 
  477
  489
  501
  513
  526
  539
  553
  567
  581
  595
  610
  625
  641
  657
  673
  690
  708
  725
  743
  762
  781
  801
  821
  841
  862
  884
  906
  928
  952
  975
Total operating expenses, $m
  571
  596
  611
  626
  641
  658
  676
  694
  713
  733
  752
  773
  794
  817
  841
  865
  890
  917
  944
  971
  1,001
  1,031
  1,063
  1,095
  1,128
  1,163
  1,199
  1,236
  1,274
  1,315
  1,356
Operating income, $m
  15
  3
  2
  3
  4
  7
  11
  16
  23
  31
  40
  51
  62
  75
  90
  105
  123
  141
  162
  184
  208
  234
  262
  292
  324
  359
  396
  435
  477
  522
  570
EBITDA, $m
  34
  19
  19
  20
  22
  25
  30
  36
  43
  51
  61
  72
  85
  98
  114
  131
  149
  169
  191
  214
  240
  267
  297
  328
  362
  398
  437
  478
  522
  570
  620
Interest expense (income), $m
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  6
  6
  7
  8
  8
  9
  9
  10
  11
  12
Earnings before tax, $m
  16
  3
  2
  2
  4
  6
  10
  15
  22
  29
  38
  49
  60
  73
  87
  102
  119
  137
  157
  179
  203
  228
  256
  285
  317
  351
  387
  425
  467
  511
  558
Tax expense, $m
  6
  1
  1
  1
  1
  2
  3
  4
  6
  8
  10
  13
  16
  20
  23
  28
  32
  37
  43
  48
  55
  62
  69
  77
  85
  95
  104
  115
  126
  138
  151
Net income, $m
  10
  2
  1
  2
  3
  5
  8
  11
  16
  21
  28
  36
  44
  53
  63
  74
  87
  100
  115
  131
  148
  167
  187
  208
  231
  256
  282
  311
  341
  373
  407

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  65
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  355
  296
  303
  310
  319
  329
  339
  351
  363
  377
  391
  407
  423
  441
  460
  480
  501
  523
  546
  571
  597
  625
  654
  685
  718
  752
  788
  826
  865
  907
  951
Adjusted assets (=assets-cash), $m
  290
  296
  303
  310
  319
  329
  339
  351
  363
  377
  391
  407
  423
  441
  460
  480
  501
  523
  546
  571
  597
  625
  654
  685
  718
  752
  788
  826
  865
  907
  951
Revenue / Adjusted assets
  2.024
  2.024
  2.023
  2.026
  2.025
  2.024
  2.027
  2.023
  2.028
  2.024
  2.026
  2.025
  2.026
  2.025
  2.022
  2.023
  2.022
  2.023
  2.026
  2.025
  2.025
  2.024
  2.024
  2.025
  2.022
  2.023
  2.023
  2.023
  2.024
  2.024
  2.025
Average production assets, $m
  77
  78
  80
  82
  84
  87
  89
  92
  96
  99
  103
  107
  111
  116
  121
  126
  132
  138
  144
  150
  157
  164
  172
  180
  189
  198
  207
  217
  228
  239
  250
Working capital, $m
  127
  64
  66
  67
  69
  71
  74
  76
  79
  82
  85
  88
  92
  96
  100
  104
  108
  113
  118
  124
  129
  135
  142
  148
  155
  163
  171
  179
  187
  196
  206
Total debt, $m
  4
  6
  10
  14
  19
  24
  30
  36
  43
  50
  58
  66
  75
  84
  94
  105
  116
  128
  141
  154
  168
  183
  199
  216
  233
  251
  271
  291
  313
  335
  359
Total liabilities, $m
  157
  159
  163
  167
  172
  177
  183
  189
  196
  203
  211
  219
  228
  237
  247
  258
  269
  281
  294
  307
  321
  336
  352
  369
  386
  404
  424
  444
  466
  488
  512
Total equity, $m
  198
  137
  140
  143
  147
  152
  157
  162
  168
  174
  181
  188
  196
  204
  212
  222
  231
  242
  252
  264
  276
  289
  302
  317
  332
  347
  364
  381
  400
  419
  440
Total liabilities and equity, $m
  355
  296
  303
  310
  319
  329
  340
  351
  364
  377
  392
  407
  424
  441
  459
  480
  500
  523
  546
  571
  597
  625
  654
  686
  718
  751
  788
  825
  866
  907
  952
Debt-to-equity ratio
  0.020
  0.050
  0.070
  0.100
  0.130
  0.160
  0.190
  0.220
  0.250
  0.290
  0.320
  0.350
  0.380
  0.410
  0.440
  0.470
  0.500
  0.530
  0.560
  0.580
  0.610
  0.630
  0.660
  0.680
  0.700
  0.720
  0.740
  0.760
  0.780
  0.800
  0.820
Adjusted equity ratio
  0.459
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  10
  2
  1
  2
  3
  5
  8
  11
  16
  21
  28
  36
  44
  53
  63
  74
  87
  100
  115
  131
  148
  167
  187
  208
  231
  256
  282
  311
  341
  373
  407
Depreciation, amort., depletion, $m
  19
  16
  17
  17
  18
  18
  19
  19
  20
  21
  21
  21
  22
  23
  24
  25
  26
  28
  29
  30
  31
  33
  34
  36
  38
  40
  41
  43
  46
  48
  50
Funds from operations, $m
  46
  18
  18
  19
  20
  23
  26
  31
  36
  42
  49
  57
  66
  76
  87
  100
  113
  128
  144
  161
  180
  200
  221
  244
  269
  295
  324
  354
  386
  421
  457
Change in working capital, $m
  7
  1
  1
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
Cash from operations, $m
  39
  17
  17
  17
  18
  21
  24
  28
  33
  39
  46
  54
  62
  72
  83
  95
  109
  123
  139
  156
  174
  194
  215
  237
  262
  288
  316
  346
  378
  412
  448
Maintenance CAPEX, $m
  0
  -15
  -16
  -16
  -16
  -17
  -17
  -18
  -18
  -19
  -20
  -21
  -21
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -30
  -31
  -33
  -34
  -36
  -38
  -40
  -41
  -43
  -46
  -48
New CAPEX, $m
  -9
  -1
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -12
Cash from investing activities, $m
  -18
  -16
  -18
  -18
  -18
  -20
  -20
  -21
  -21
  -23
  -24
  -25
  -25
  -27
  -28
  -29
  -31
  -32
  -34
  -36
  -37
  -38
  -41
  -42
  -45
  -47
  -49
  -51
  -53
  -57
  -60
Free cash flow, $m
  21
  1
  -1
  -1
  0
  1
  4
  7
  11
  16
  22
  29
  37
  45
  55
  66
  78
  91
  105
  120
  137
  155
  174
  195
  217
  241
  267
  294
  324
  355
  388
Issuance/(repayment) of debt, $m
  -1
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  17
  18
  19
  20
  21
  23
  24
Issuance/(repurchase) of shares, $m
  -1
  1
  2
  2
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -2
  4
  6
  6
  6
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  17
  18
  19
  20
  21
  23
  24
Total cash flow (excl. dividends), $m
  18
  4
  5
  5
  6
  7
  10
  13
  18
  24
  30
  37
  46
  55
  65
  77
  89
  103
  118
  134
  151
  170
  190
  212
  235
  260
  286
  315
  345
  378
  412
Retained Cash Flow (-), $m
  3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
Prev. year cash balance distribution, $m
 
  64
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  66
  2
  2
  2
  2
  5
  8
  12
  17
  23
  30
  38
  47
  57
  68
  79
  92
  107
  122
  139
  157
  176
  197
  220
  244
  270
  297
  327
  358
  392
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  63
  1
  1
  1
  2
  3
  5
  8
  10
  12
  14
  16
  18
  19
  20
  20
  20
  20
  19
  18
  16
  15
  13
  11
  9
  8
  6
  5
  4
  3
Current shareholders' claim on cash, %
  100
  99.8
  99.2
  98.5
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1

Daktronics, Inc. is a supplier of electronic scoreboards, electronic display systems, digital messaging solutions, software and services for sporting, commercial and transportation applications. The Company operates through five segments: Commercial, Live Events, High School Park and Recreation, Transportation, and International. The Company offers a range of products, from small scoreboards and electronic displays to video display systems, as well as related control, timing and sound systems. It designs, markets, manufactures, installs and services integrated systems displaying real-time data, graphics, animation and video. Its product families include video displays, scoreboards and timing systems, message displays, intelligent transportation systems (ITS) dynamic message signs, space availability displays, audio systems, advertising displays, digit and price displays and digital messaging systems.

FINANCIAL RATIOS  of  Daktronics (DAKT)

Valuation Ratios
P/E Ratio 40.9
Price to Sales 0.7
Price to Book 2.1
Price to Tangible Book
Price to Cash Flow 10.5
Price to Free Cash Flow 13.6
Growth Rates
Sales Growth Rate 3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -47.1%
Cap. Spend. - 3 Yr. Gr. Rate -8.5%
Financial Strength
Quick Ratio 65
Current Ratio 0.3
LT Debt to Equity 1.5%
Total Debt to Equity 2%
Interest Coverage 0
Management Effectiveness
Return On Assets 2.8%
Ret/ On Assets - 3 Yr. Avg. 3%
Return On Total Capital 4.9%
Ret/ On T. Cap. - 3 Yr. Avg. 5.3%
Return On Equity 5%
Return On Equity - 3 Yr. Avg. 5.4%
Asset Turnover 1.7
Profitability Ratios
Gross Margin 23.9%
Gross Margin - 3 Yr. Avg. 22.9%
EBITDA Margin 6%
EBITDA Margin - 3 Yr. Avg. 5.7%
Operating Margin 2.7%
Oper. Margin - 3 Yr. Avg. 2.7%
Pre-Tax Margin 2.7%
Pre-Tax Margin - 3 Yr. Avg. 2.8%
Net Profit Margin 1.7%
Net Profit Margin - 3 Yr. Avg. 1.8%
Effective Tax Rate 37.5%
Eff/ Tax Rate - 3 Yr. Avg. 35.1%
Payout Ratio 140%

DAKT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DAKT stock intrinsic value calculation we used $587 million for the last fiscal year's total revenue generated by Daktronics. The default revenue input number comes from 2017 income statement of Daktronics. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our DAKT stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for DAKT is calculated based on our internal credit rating of Daktronics, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Daktronics.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of DAKT stock the variable cost ratio is equal to 19.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $465 million in the base year in the intrinsic value calculation for DAKT stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Daktronics.

Corporate tax rate of 27% is the nominal tax rate for Daktronics. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the DAKT stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for DAKT are equal to 13%.

Life of production assets of 4.4 years is the average useful life of capital assets used in Daktronics operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for DAKT is equal to 10.7%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $198 million for Daktronics - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 44.767 million for Daktronics is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Daktronics at the current share price and the inputted number of shares is $0.4 billion.

RELATED COMPANIES Price Int.Val. Rating
LYTS LSI Industries 6.85 3.13  str.sell
LRAD LRAD 2.26 2.01  hold

COMPANY NEWS

▶ ETFs with exposure to Daktronics, Inc. : December 5, 2017   [Dec-05-17 12:37PM  Capital Cube]
▶ Daktronics Announces Quarterly Cash Dividend per Share   [Dec-01-17 10:35AM  GlobeNewswire]
▶ Daktronics posts 2Q profit   [Nov-21-17 07:41AM  Associated Press]
▶ Daktronics, Inc. to Host Earnings Call   [06:50AM  ACCESSWIRE]
▶ ETFs with exposure to Daktronics, Inc. : November 1, 2017   [Nov-01-17 12:04PM  Capital Cube]
▶ Top 10 Stocks Under $20   [Oct-19-17 02:40PM  Zacks]
▶ New Strong Buy Stocks for October 6th   [Oct-06-17 11:03AM  Zacks]
▶ ETFs with exposure to Daktronics, Inc. : October 5, 2017   [Oct-05-17 10:58AM  Capital Cube]
▶ New Strong Buy Stocks for October 4th   [Oct-04-17 09:52AM  Zacks]
▶ 3 Tech Stocks Under $10 to Buy Now   [Sep-05-17 03:35PM  Zacks]
▶ Daktronics Announces Quarterly Cash Dividend per Share   [Sep-01-17 09:00AM  GlobeNewswire]
▶ Daktronics posts 1Q profit   [Aug-22-17 10:39PM  Associated Press]
▶ ETFs with exposure to Daktronics, Inc. : July 24, 2017   [Jul-24-17 03:17PM  Capital Cube]
▶ ETFs with exposure to Daktronics, Inc. : July 14, 2017   [Jul-14-17 01:51PM  Capital Cube]
▶ ETFs with exposure to Daktronics, Inc. : June 30, 2017   [Jun-30-17 02:50PM  Capital Cube]
▶ 3 Great Stocks Under $10   [Jun-19-17 12:04PM  Motley Fool]
▶ ETFs with exposure to Daktronics, Inc. : June 16, 2017   [Jun-16-17 03:37PM  Capital Cube]
▶ Daktronics Announces Quarterly Cash Dividend per Share   [Jun-02-17 09:30AM  GlobeNewswire]
▶ Daktronics posts 4Q profit   [07:47AM  Associated Press]
▶ 3 Small-Cap Stocks for the Long Term   [May-24-17 09:23AM  Motley Fool]
▶ Daktronics Releases Latest Digital Billboard Technology   [Mar-13-17 10:22AM  GlobeNewswire]
▶ Daktronics reports 3Q loss   [09:11AM  AP]
Financial statements of DAKT
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