Daktronics Inc. (DAKT: sentiment, chart, options) is on the move today after the company reported a 37% gain in fiscal first-quarter net income. Thanks to a pair of large projects in Beijing and the United Kingdom, the digital-billboard firm raked in a profit of $9.73 million, or 24 cents per share, on $161.2 million in sales. The results surpassed the Street's consensus estimate; analysts were expecting a profit of just 17 cents per share on $141 million in revenue.

There were a few weak spots in the otherwise-solid report. Gross margin for the quarter declined from 30.5% to 28.1%, while orders declined by 2.7%. Margins were compressed by higher warranty costs and inventory write-downs.

For the rest of the fiscal year, DAKT reiterated its expectation that sales will increase by more than 20%. The company recently inked a contract for the new Meadowlands Stadium, which could bring in upwards of $45 million in revenue. Analysts are expecting revenue growth of 20% to $599 million.

Today's earnings report seems to have caught quite a few skeptics off-guard, with DAKT up more than 11% at last check. In the 2 weeks preceding the report, option traders picked up more puts to open than calls on the stock, as evidenced by its put/call volume ratio of 1.45 on the International Securities Exchange.

In the same vein, short interest represents more than 20% of the security's available float, an accumulation that accounts for 12.5 times the equity's average daily volume. This suggests that an earnings-related rally could have legs to run for a while. However, DAKT's intraday momentum has stalled out at the 21 level, a site of former support turned staunch resistance. A rejection at this region could embolden the bears to remain entrenched in their pessimistic stance.