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
-
Buffered ETFs for a Rocky MarketBuffered ETFs provide protection during market downturns, but in exchange, your gains are capped.
-
Time to Spring-Clean Your Finances: A Financial Professional's Four Steps to Tidy Them UpA midyear review of everything from spending to saving, with adjustments as needed, can set you on track to financial security. Plus, don't forget to check in on your workplace benefits.
-
Why a Law Firm Secretly Recording Client Conversations Is Wrong (and Illegal)A law firm that has been recording client conversations without the clients' knowledge or permission and has threatened employees if they speak out faces legal and ethical challenges.
-
Stock Market Today: Markets Discount Another U.S. DowngradeAfter Friday's closing bell, Moody's followed Standard & Poor's and Fitch and cut its rating on U.S. government debt.
-
Donating Complex Assets Doesn't Have to Be ComplicatedIf you're looking to donate less-conventional assets but don't know where to start, this charity executive has answers, such as considering a donor-advised fund (DAF) for its tax benefits and ease of use.
-
What's Next for Stocks After a Chaotic SpringA chaotic tariff policy buffets investors looking for clarity on the economy and inflation.
-
Think a Repeal of the Estate Tax Wouldn't Affect You? WrongThe wording of any law that repeals or otherwise changes the federal estate tax could have an impact on all of us. Here's what you need to know, courtesy of an estate planning and tax attorney.
-
In Your 50s? We Need to Talk About Long-Term CareMany people don't like thinking about long-term care, but most people will need it. This financial professional recommends planning for these costs as early as possible to avoid stress later.
