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Why Daktronics, Inc. Shares Dove Lower Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Daktronics  (NASDAQ: DAKT  ) fell 18% Wednesday after the large-screen video display and scoreboard specialist released disappointing fiscal fourth-quarter results.

So what: Quarterly sales rose 9.4% to $136.2 million, which translated to relatively flat net income of $1.8 million, or $0.04 per share. Analysts, on average, were looking for significantly higher net income of $0.14 per share on sales of $139 million.

Now what: Daktronics CEO Reece Kurtenbach insisted they continue to see profitable growth opportunities in both domestic and international markets. However, he also noted, "While we are the world leader in video system design and delivery, the world‐wide marketplace remains competitive. The marketplace has stabilized over the past few years since the recession, but the price per square food (or square meter) of display has decreased during this time."

At first glance, the stock looks reasonably priced at around one times sales and 15 times next year's expected earnings. However, considering analysts' estimates are likely to drift lower as they have time to fully dig into today's report, I prefer to avoid Daktronics stock for the time being.

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To its credit, though, Daktronics is rewarding investors for their patience with a nearly 3% dividend. And the smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

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Steve Symington

Technology and consumer goods specialist for the Fool. Steve looks for responsible businesses which positively shape our lives. Then, he invests accordingly. Enjoy his work? Connect with him on Twitter & Facebook so you don't miss a thing.

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Daktronics CAPS Rating: ***