Dave & Buster's Entertainment (PLAY) stock is struggling for direction Wednesday after the entertainment and restaurant chain reported its second-quarter earnings results.
In the 13 weeks ended August 6, Dave & Buster's revenue increased 2.8% year-over-year to $557.1 million, helped by the addition of 13 net new stores. While its comparable-store sales decreased 6.3%, earnings per share (EPS) were up 19.1% from the year-ago period to $1.12.
"We are pleased with the progress we are making on our strategic initiatives and on the strong financial results achieved during the quarter," said Dave & Buster's CEO Chris Morris in a statement. "During the quarter, we grew revenue and adjusted EBITDA [earnings before interest, taxes, depreciation and amortization], expanded our adjusted EBITDA margins and generated strong operating cash flow which allowed us to invest in the business and return cash to shareholders."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The results were mixed compared with what analysts expected. Wall Street was anticipating revenue of $560.6 million and earnings of 86 cents per share, according to MarketWatch.
"While we are disappointed with our same-store sales performance during the quarter in this complex and challenging environment, we are laser focused on our medium-term goals and encouraged by the progress we are making on each of the initiatives," Morris said. "We fully expect the impact of our initiatives to lead to growth in same-store sales, revenue, EBITDA and cash flow in the coming quarters."
Is PLAY stock a buy, sell or hold?
Dave & Buster's shares are down more than 45% for the year to date, but Wall Street is bullish on the consumer discretionary stock.
According to S&P Global Market Intelligence, the average analyst target price for PLAY stock is $52.71, representing implied upside of nearly 80% to current levels. Additionally, the consensus recommendation is Buy.
Speaking for the bulls is financial services firm Jefferies, which has a Buy rating and $60 price target on PLAY stock.
The company is well-positioned to capture share from other entertainment concepts, says Jefferies analyst Andy Barish. The analyst also likes Dave & Buster's strong development opportunity and store economics.
Barish adds that PLAY's long-term operating efficiency potential is underappreciated and its stock is undervalued and trades at a discount to full-service peers.
Related Content
-
Reasons to Consider Taking Another Look at GoldThe cycle of excessive borrowing to finance government expenditures, grants and aid of all kinds beyond taxable GDP and productivity might not end well.
-
How Trump’s Tariffs Could Impact Your Grocery BillTariffs at the checkout: Preparing for higher grocery bills and how to manage them.
-
Six Steps to Simplify Your Estate for Your HeirsA simplified estate strategy will expedite the settlement of your estate after you're gone, lower audit risk, reduce costs and cut your beneficiaries' stress.
-
Three Actions to Protect Wealth Transfer Amid Tax UncertaintyHow should families plan to pass on their wealth amid ongoing uncertainty over estate taxes? Even if TCJA provisions are extended, they might still be temporary.
-
Business Owners: How to Calculate Your Wealth Gap in Five MinutesHow much would you need from the sale of your business to retire without sacrificing your lifestyle? This simple calculation will give you an idea.
-
Stock Market Today: Dow Adds 485 Points After Trump's Tariff DelayThe White House said it will postpone tariffs on automotive imports from Canada and Mexico for one month.
-
10 Ways to Refine Your Financial Plan for a More Secure FutureSignificant benefits throughout the rest of the year can be had if you take some time now to revisit your financial plan and adjust accordingly.
-
The Most Important Number for a Business Owner Considering a SaleCompany owners hoping to sell and stop working won't know whether an offer on their business is good enough unless they know their 'wealth gap.'Evan
-
Stock Market Today: Dow Drops 670 Points on Trade War EffectA prodigious rally by the battered leader of the AI revolution typified an increasingly volatile picture for investors, traders and speculators.
-
Dividing an Estate? Five Ways to Create TransparencyLetting your children know your intentions while you're still around to explain your reasoning, and while you can make adjustments, can limit discontent later.
