Daktronics Inc. (NASDAQ:DAKT) stock rose Wednesday after the digital display and scoring systems company reported fourth-quarter earnings and revenue that exceeded Wall Street expectations.

The company posted fiscal fourth-quarter net sales of $208.6 million, up 20.9% from a year earlier and above analyst estimates of $205.3 million.

Adjusted earnings were 27 cents per share, topping expectations of 20 cents per share. GAAP earnings were 17 cents per share, compared with a loss of 19 cents per share in the prior-year period.

Profitability Improves Across Business

For fiscal 2026, Daktronics reported record net sales of $838.7 million, an increase of 10.9% from the prior year. GAAP earnings rose to 92 cents per share from a loss of 21 cents per share in fiscal 2025, while adjusted earnings increased to $1.05 per share from 84 cents.

Fourth-quarter operating margin improved to 6.8% from negative 1.0% a year earlier. Full-year operating margin increased to 7.3% from 4.4%, while adjusted operating income rose to $64.6 million from $49.6 million.

Gross margin expanded to 28.0% in the quarter from 25.0% a year ago. Management said the improvement was driven primarily by stronger revenue conversion, operating leverage, manufacturing discipline and working capital efficiency rather than changes in business mix.

Orders Hit Record Annual High

Fiscal 2026 orders increased 10.2% to a record $860.8 million. Fourth-quarter orders declined 7.7% to $222 million, reflecting a difficult comparison against a year-earlier period when customers accelerated purchases ahead of pricing increases.

Year-end backlog rose 4.3% to $356.2 million, with approximately 52% expected to convert into revenue during the first quarter of fiscal 2027.

The Live Events segment reported a 10.1% increase in annual sales to $321.1 million, while orders climbed 18.4% to $336 million. Daktronics said it has secured five Major League Baseball stadium installation projects since the third quarter of fiscal 2025.

Commercial sales increased 15.7% to $180.8 million. Transportation orders rose 23.7%, while International sales advanced 24.5%.

Strong Cash Position, Buybacks Continue

Daktronics generated $49.2 million in operating cash flow and $34.9 million in free cash flow during fiscal 2026.

The company ended the year with $131.6 million in cash and cash equivalents and $10.8 million in total debt. It also repurchased 1.4 million shares for $25.4 million during the fiscal year.

Tariffs and Expansion Remain Key Focus

Management said tariff-related uncertainty remains a risk and noted that no tariff refund amounts were recognized because of uncertainty around eligibility, timing and potential recovery amounts.

The company said it continues to use pricing actions, supplier negotiations, sourcing initiatives and manufacturing efficiencies to offset potential tariff impacts.

Daktronics expects its Mexico manufacturing facility to begin production in July 2026, with initial shipments planned for the fiscal second quarter. Management said the facility should support margin expansion over time, though benefits are not expected immediately.

The company also highlighted Camino 8 as a potential source of recurring software revenue within its Live Events platform.

Daktronics said it remains on track toward its fiscal 2028 targets of 7% to 10% annual revenue growth, operating margins of 10% to 12%, and return on invested capital of 17% to 20%.

DAKT Price Action: Daktronics shares were up 1.91% at $20.49 at the time of publication on Wednesday, according to Benzinga Pro data.

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