A significant insider buy by John P. Friel, Director at Daktronics DAKT, was executed on September 11, and reported in the recent SEC filing.

What Happened: A Form 4 filing from the U.S. Securities and Exchange Commission on Wednesday showed that Friel purchased 7,160 shares of Daktronics. The total transaction amounted to $84,989.

As of Thursday morning, Daktronics shares are up by 0.9%, currently priced at $12.3.

About Daktronics

Daktronics Inc designs and manufactures electronic scoreboards, programmable display systems, and large-screen video displays for sporting, commercial, and transportation applications. It is engaged in a full range of activities: marketing and sales, engineering and product design and development, manufacturing, technical contracting, professional services, and customer service and support. The company offers a complete line of products, from small scoreboards and electronic displays to large multimillion-dollar video display systems as well as related control, timing, and sound systems. The company has five reportable segments: Commercial, Live Events, High School Park and Recreation, Transportation, and International. The company makes the majority of its revenue from Live events.

Financial Milestones: Daktronics’s Journey

Revenue Challenges: Daktronics’s revenue growth over 3 months faced difficulties. As of 31 July, 2024, the company experienced a decline of approximately -2.77%. This indicates a decrease in top-line earnings. When compared to others in the Information Technology sector, the company faces challenges, achieving a growth rate lower than the average among peers.

Evaluating Earnings Performance:

• Gross Margin: The company shows a low gross margin of 26.4%, suggesting potential challenges in cost control and profitability compared to its peers.

• Earnings per Share (EPS): Daktronics’s EPS is below the industry average, signaling challenges in bottom-line performance with a current EPS of -0.11.

Debt Management: Daktronics’s debt-to-equity ratio is below the industry average. With a ratio of 0.32, the company relies less on debt financing, maintaining a healthier balance between debt and equity, which can be viewed positively by investors.

Valuation Metrics:

• Price to Earnings (P/E) Ratio: The current Price to Earnings ratio of 58.05 is higher than the industry average, indicating the stock is priced at a premium level according to the market sentiment.

• Price to Sales (P/S) Ratio: The Price to Sales ratio is 0.7, which is lower than the industry average. This suggests a possible undervaluation based on sales performance.

• EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): With a lower-than-industry-average EV/EBITDA ratio of 6.15, Daktronics presents a potential value opportunity, as investors are paying less for each unit of EBITDA.

Market Capitalization Analysis: Reflecting a smaller scale, the company’s market capitalization is positioned below industry averages. This could be attributed to factors such as growth expectations or operational capacity.

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Navigating the Impact of Insider Transactions on Investments

Considering insider transactions is valuable, but it’s crucial to evaluate them in conjunction with other investment factors.

In legal terms, an “insider” refers to any officer, director, or beneficial owner of more than ten percent of a company’s equity securities registered under Section 12 of the Securities Exchange Act of 1934. This can include executives in the c-suite and large hedge funds. These insiders are required to let the public know of their transactions via a Form 4 filing, which must be filed within two business days of the transaction.

When a company insider makes a new purchase, that is an indication that they expect the stock to rise.

Insider sells, on the other hand, can be made for a variety of reasons, and may not necessarily mean that the seller thinks the stock will go down.

Transaction Codes Worth Your Attention

When dissecting transactions, the focal point for investors is often those occurring in the open market, meticulously detailed in Table I of the Form 4 filing. A P in Box 3 denotes a purchase, while S signifies a sale. Transaction code C indicates the conversion of an option, and transaction code A denotes a grant, award, or other acquisition of securities from the company.

Check Out The Full List Of Daktronics’s Insider Trades.

This article was generated by Benzinga’s automated content engine and reviewed by an editor.