Dave & Buster's (PLAY, Financial) reported first-quarter revenue of $567.7 million, surpassing market expectations of $565 million. However, the company experienced an 8.3% drop in sales at comparable stores during the same period. Despite these challenges, the leadership is optimistic about the ongoing improvements attributed to their "back to basics" strategy.
According to Kevin Sheehan, the board chair and interim CEO, the company has made significant progress in refining its operations, marketing, and investment in menu, games, and store remodels. This strategic overhaul is aimed at reversing past mistakes and enhancing overall execution. Sheehan reiterated confidence in the company's path forward, anticipating notable gains in revenue, adjusted EBITDA, free cash flow, and shareholder value in the upcoming months.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 7 analysts, the average target price for Dave & Buster's Entertainment Inc (PLAY, Financial) is $25.29 with a high estimate of $35.00 and a low estimate of $18.00. The average target implies an downside of 2.26% from the current price of $25.87. More detailed estimate data can be found on the Dave & Buster's Entertainment Inc (PLAY) Forecast page.
Based on the consensus recommendation from 10 brokerage firms, Dave & Buster's Entertainment Inc's (PLAY, Financial) average brokerage recommendation is currently 2.6, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Dave & Buster's Entertainment Inc (PLAY, Financial) in one year is $57.70, suggesting a upside of 123.04% from the current price of $25.87. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Dave & Buster's Entertainment Inc (PLAY) Summary page.
PLAY Key Business Developments
Release Date: April 07, 2025
- Revenue: $535 million for Q4 fiscal 2024.
- Net Income: $9 million or $0.25 per diluted share.
- Adjusted Net Income: $27 million or $0.69 per diluted share.
- Adjusted EBITDA: $127 million with a margin of 23.8%.
- Comparable Store Sales: Decreased 9.4% on a like-for-like calendar basis versus the prior year period.
- Operating Cash Flow: $108.9 million for Q4.
- Cash and Credit Availability: $6.9 million in cash and $503.5 million available under a $650 million revolving credit facility.
- Net Total Leverage Ratio: 2.8 times.
- Share Repurchases: Nearly 3 million shares for approximately $85 million in Q4; total of 5 million shares repurchased in fiscal 2024.
- Sale-Leaseback Proceeds: $111 million from Q4 transactions, totaling $185 million for fiscal 2024.
- Capital Expenditures: $558 million on a gross basis or $357 million net for fiscal 2024.
- New Store Openings: 5 new stores in Q4, totaling 14 new stores in fiscal 2024.
- Franchise Development: First international franchise location opened in India; 35 franchise partnership agreements in place.
- Fiscal 2025 Capital Expenditure Expectation: Not to exceed $220 million.
- Planned New Store Openings for Fiscal 2025: 10 to 12 new stores.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Dave & Buster's Entertainment Inc (PLAY, Financial) has identified clear opportunities for improvement and is taking actions to address past mistakes.
- The company has reintroduced TV advertising and returned to its historically successful promotional activities, such as the Eat & Play Combo.
- Financial position remains strong with low leverage, no near-term debt maturities, and significant operating free cash flow generation.
- New store development continues to deliver high returns on investment, with 14 new stores added in fiscal 2024 and plans for further expansion.
- The introduction of new games, including the Human Crane and other premium marquee games, is expected to enhance the customer experience and drive revenue growth.
Negative Points
- Comparable store sales decreased by 9.4% in the fourth quarter of fiscal 2024, indicating ongoing challenges in driving traffic and sales.
- Previous leadership's significant changes to marketing, operations, and menu negatively impacted the business, requiring a back-to-basics approach.
- The company is facing a mixed economic environment, with uncertainties impacting consumer behavior and spending.
- Remodel strategy faced challenges due to improper testing and budget overspending, leading to a more measured pace in 2025.
- The competitive landscape remains a concern, with the need to differentiate and improve brand positioning to better compete in the market.
