One-glance verdict
Undervalued
$18.58 our estimate vs market $6.38
66% below our estimate, below the bear case
Fundamentals snapshot
Dialight plc
DIALF · PNK · Industrials · Electrical Equipment & Parts
Current price
$6.38
52-week range
$3.15 - $6.38
Market cap
$256.46M
Balance sheet
Stretched
1.56x Concerning
Net debt $10.20M. Interest coverage shows how many times profit covers the interest bill.
What stands out
1 Reward
1 Risk
1 rewards · 1 risks
- Reward Free cash flow was positive in 1/10 years.
- Risk Stock trades 96.1% above its 5-year average P/E.
What this company does
Dialight plc
Dialight plc makes tough LED lights for places like oil rigs and factories, and its money mainly comes from selling these lights to big industrial customers. This matters because it shows the company is a key supplier for industries that need reliable lighting in challenging environments.
How the company got here
Dialight was founded in 1938, initially making instrument panel lights for aircraft. Over the decades, it evolved and became a pioneer in LED technology, launching its first LED product in 1971, shortly after the LED was invented. The company has since focused on LED solutions for industrial and hazardous environments. A significant event in its recent history involved prolonged legal proceedings with its former manufacturing partner, Sanmina Corporation, concerning contract termination, with some of Dialight's claims allowed to proceed to trial. Dialight is headquartered in the UK but has operations in multiple countries, including the US, Malaysia, and Mexico.
What it actually does
Dialight designs, manufactures, and sells LED lighting solutions and electronic components. Think of them as making specialized lights for places where regular lights might not be safe or suitable, like oil rigs, mines, or factories with dangerous chemicals. They also make small electronic parts that indicate status or signal things, like tiny lights on circuit boards or in traffic signals. Their products are known for being durable, energy-efficient, and reliable, which helps customers save on energy and maintenance costs.
Lighting
This is Dialight's main business, making up the largest portion of its revenue. They produce a wide range of LED lights designed for tough industrial settings. This includes lights for large open areas like warehouses (high bays), outdoor spaces (area and flood lights), and linear fixtures for corridors or production lines. They also offer specialized lighting for hazardous locations, meaning places where flammable gases or dust might be present, requiring lights that won't cause an explosion. These lights are built to withstand harsh conditions, reduce energy use, and last a long time, minimizing the need for frequent replacements.
Signals & Components
This segment focuses on smaller electronic components, primarily using LED technology. These include indicators like small lights that show the status of electronic equipment (panel mount and circuit board indicators), and components used in traffic, vehicle, and rail signaling systems. Essentially, they provide visual cues and signals for various applications, from indicating if a machine is on or off to being part of larger signaling systems like those used on railways or for traffic management. This part of the business also serves original equipment manufacturers (OEMs) who build electronic devices.
What management is betting on now
Dialight's management is focused on a strategy to improve profitability and drive future growth. This includes optimizing their manufacturing operations, such as consolidating facilities to reduce costs and increase flexibility. They are also restructuring their sales approach to encourage profitable sales and are looking to expand revenue by focusing on markets where their LED lighting offers significant advantages in energy savings and reduced maintenance. A key part of their strategy involves a commitment to sustainability, aiming to be a net-zero company by 2040 and helping industrial customers reduce their carbon footprint through energy-efficient lighting.
Price history
How the share price has moved
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Is it cheap or expensive?
Fair value $18.58 vs current price $6.38
Our most-likely fair value is $18.58 a share — about 191.3% above today's price of $6.38, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Stretched
Net debt $10.2M. Interest coverage 1.6x.
Net debt
$10.20M
Interest coverage
1.56x
Dialight plc is healthier than 0 of 1 peers on balance-sheet leverage.
Stretched
Worse cushion
Baseline
Better cushion
DIALF
BASELINE
Dialight plc
Total debt $17.30M Interest coverage 1.56x This is the baseline the peer rows are being compared against.
What you should know
The case for and against DIALF
1 Reward
1 Risk
Rewards
-
Free cash flow was positive in 1/10 years.
Risks
-
Stock trades 96.1% above its 5-year average P/E.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
638.00x
Forward P/E
—
P/B
5.48x
P/S
1.54x
EV/EBITDA
20.77x
PEG ratio
0.36x
Profitability
How much profit each dollar creates
Gross margin
39.0%
Operating margin
4.5%
Net margin
0.2%
ROE
1.1%
ROA
4.9%
Health
Liquidity and balance-sheet strength
Debt / equity
0.37x
Current ratio
1.78x
Quick ratio
0.90x
Total debt
$17.30M
Total cash
$7.10M
Growth
How the business has been compounding
Revenue TTM
$166.90M
Revenue 5Y CAGR
-2.1%
EPS TTM
0.01
EPS 5Y CAGR
-11.7%
Cash flow
How much cash the business throws off
Operating CF TTM
$31.30M
Free CF TTM
$26.50M
FCF margin
15.9%
Dividend
Shareholder payout
Yield
0.0%
Payout ratio
0.0%
Last ex-div date
2015-04-30