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 electronic display specialist Daktronics (Nasdaq: DAKT) plummeted more than 20% in intraday trading Tuesday after the company issued a cautious outlook for the current quarter.

So what: Daktronics managed to swing to a fiscal-third-quarter profit on rebounding demand, but management warned that its gross margins would continue to come under heavy pressure in the fourth quarter. CEO Jim Morgan noted that, "the competition for orders in the marketplace across all business units remains very keen."

Now what: I wouldn't be so quick to pounce on Daktronics. Even with today's big drop, the shares are still up about 35% over the past six months and sport a lofty 30-plus EV/EBITDA ratio. While demand for Daktronics' billboards certainly seems to be turning, intensifying competition, particularly from Asian suppliers, requires more of a discount than Wall Street seems to be offering.

Interested in more info on Daktronics? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.

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