DGLY: Tanking in Earnings

DGLY is a real small time company in the audio & video equipment industry. The industry as a whole has been in turmoil suffer -30% in returns in a 6 month period. DGLY , undeservingly has been outperforming the industry. It only has 3.5 million float so it will experience severe price swings. The company has been suffering financially as total revue has slipped from 25.2 million in 2010 to just 17.4 in 2014. The company's net income of -9.1 million in 2014 is the worst in 5 years. The company released earnings after the bell today and has since dropped over 16% on last check.

CEO Stanton Ross had this to say:
"While our first quarter revenue exceeded prior-year levels by 9%, we believe the increase would have been significantly greater if certain suppliers had been able to deliver long lead time components on a timely basis," stated Stanton E. Ross, Chief Executive Officer of Digital Ally , Inc. "As a result of certain component shortages, we were restricted in the number of FirstVU HD body-worn cameras that we were able to ship in the three months ended March 31, 2015. However, we are encouraged that orders for the FirstVU HD continue to increase in response to growing recognition of the value of video evidence among law enforcement agencies throughout the U.S. and abroad."

Mr. Ross says the company is encouraged by the growth in orders, but the year over year rise in inventories suggests a lack of overall demand. I expect this company to be trading in the single digits sooner rather then later. Key areas of support are 15.64, 15.00, 13.50, with 9.86 serving as the 1 year main support line.

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