Daktronics down on earnings miss due to cost overruns
NEW YORK – Daktronics Inc. stock fell Wednesday after the company reported earnings in the latest quarter that missed analyst expectations because of cost overruns.Shares of Daktronics fell $8.46, or 27 percent, to $22.52 in afternoon trading on the Nasdaq Stock Market.The Brookings, S.D.-based designer of electronic scoreboards and displays, Wednesday said it earned $5 million, or 12 cents a share, on revenue of $92.2 million in the fiscal first quarter ended July 29.Analysts were expecting earnings of 16 cents a share, according to Thomson Financial.In the same period a year earlier, it earned $4.6 million, or 11 cents a share, on revenue of $72.3 million.Chief Executive Jim Morgan said the declining margins were due, in part, to some one-time occurrences that raised the cost on several large projects, as well as revenue not growing as quickly as expected.Daktronics said it expects second-quarter earnings of 13 cents to 18 cents a share. The low end of Wall Street expectations is 18 cents a share.”The company has been seeing some margin pressures due to operating constraints … but in the next quarter that will improve slightly,” said Sidoti analyst Steve Alterbrando.Daktronics has been short on employees, operation space and equipment, which has caused some delays, Alterbrando said. The company has been ramping up its capacity, adding to near-term expenses, but it will eventually improve its volatile margins.Alterbrando, who has a “neutral” rating on the stock, sees gross profit margins in the low 30 percent range for the next fiscal year.”I like the company on the long term,” Alterbrando said, adding the company’s recent stock price was a victim of overexuberance, and that $20 is a more fair price.Alterbrando doesn’t own any shares, and Sidoti doesn’t have any investment-banking business.
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