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This Strong Buy Stock Offers Big Upside Growth Potential
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Dave & Buster's (PLAY - Free Report) got crushed by lockdowns and social distancing. Luckily, things have returned to normal throughout most of the country and the arcade and sports bar standout is already posting huge growth as consumers race to have some fun again.
Good Play?
Dave & Buster's owns and operates 143 restaurant, bar, and arcade hybrids in North America. The company’s tagline is “Eat Drink Play and Watch,” and it posted solid revenue growth since it went public in 2014.
The coronavirus put a halt to much of Dave & Buster's business seemingly overnight, as it did with casinos, concert venues, and other in-person entertainment. The company’s revenue tumbled 68% in FY20 from $1.36 billion to $437 million.
The pandemic is now seemingly in Dave & Buster's rearview amid rising vaccination rates and the massive U.S. economic reopening. Its first quarter revenue jumped 66%, with some of its locations still closed or under restrictions.
The entertainment company’s operations had mostly returned to normal by the start of its Q2, with all of its locations open, including a new spot, by the end of last quarter—which ended on August 1. In fact, Dave & Buster's second quarter sales skyrocketed over 640% to $377.6 million to top its pre-pandemic total by over $30 million.
PLAY’s $1.07 a share adjusted earnings also crushed our EPS estimate by 88%. The strong showing continued its recent stretch of huge bottom-line beats, with a 200% average beat in the trailing four quarters.
Zacks estimates call for Dave & Buster's third quarter revenue to soar 191% to help it swing from an adjusted loss of $1.01 a share last year to +$0.10 a share. Overall, its FY21 revenue is projected to climb 204% to roughly match its pre-pandemic total at $1.33 billion. Meanwhile, it’s expected to report +$2.24 a share in adjusted earnings vs. a loss of -$4.70 per share last year.
Dave & Buster's is then projected to follow up its huge comeback with 25% higher earnings and 18% stronger revenue, which would mark its best top-line growth as public firm—aside from its easy-to-compare FY21. Plus, its longer-term positive earnings revisions activity helps it land a Zacks Rank #1 (Strong Buy) right now.
Image Source: Zacks Investment Research
Other Fundamentals
U.S. consumers are flexing their muscles despite rising prices. New data out Tuesday showed U.S. retail sales jumped a seasonally adjusted 1.7% in October vs. September. This topped expectations and it is possibly a sign of more good things to come in the vital holiday shopping period. In fact, J.P. Morgan announced it was raising its U.S. GDP forecast for Q4.
Despite Dave & Buster's strong outlook and the broader hunger among many U.S. consumers to spend heavily in the face of inflation, PLAY shares are down 20% from their 12-month highs in March. Some of the blame could be placed on the fact that it soared off its covid lows and climbed after the initial vaccine news.
Investors should also know that Dave & Buster's CEO announced his retirement in September and the firm is still in the process of finding his non-interim replacement. And PLAY stock is rather heavily shorted at the moment, at around 12% of the public float.
Bottom Line
PLAY is currently stuck in a channel between its 50-day and 200-day moving averages. The stock did pop 1.8% to $39.04 a share at the end of regular trading hours Wednesday.
This gives it 30% upside before it would run into its current Zacks consensus price target of $51 a share and even more before it returns to its 2017 and 2018 levels of over $65 a share. And Dave & Buster's trades at a huge discount compared to its industry’s 27.2X average at 14.3X forward 12-month earnings.
Overall, some investors might want to take a chance on Dave & Buster’s stock at the moment. And Wall Street remains rather high on the stock, with six of the nine brokerage recommendations Zacks has at "Strong Buys."
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This Strong Buy Stock Offers Big Upside Growth Potential
Dave & Buster's (PLAY - Free Report) got crushed by lockdowns and social distancing. Luckily, things have returned to normal throughout most of the country and the arcade and sports bar standout is already posting huge growth as consumers race to have some fun again.
Good Play?
Dave & Buster's owns and operates 143 restaurant, bar, and arcade hybrids in North America. The company’s tagline is “Eat Drink Play and Watch,” and it posted solid revenue growth since it went public in 2014.
The coronavirus put a halt to much of Dave & Buster's business seemingly overnight, as it did with casinos, concert venues, and other in-person entertainment. The company’s revenue tumbled 68% in FY20 from $1.36 billion to $437 million.
The pandemic is now seemingly in Dave & Buster's rearview amid rising vaccination rates and the massive U.S. economic reopening. Its first quarter revenue jumped 66%, with some of its locations still closed or under restrictions.
The entertainment company’s operations had mostly returned to normal by the start of its Q2, with all of its locations open, including a new spot, by the end of last quarter—which ended on August 1. In fact, Dave & Buster's second quarter sales skyrocketed over 640% to $377.6 million to top its pre-pandemic total by over $30 million.
PLAY’s $1.07 a share adjusted earnings also crushed our EPS estimate by 88%. The strong showing continued its recent stretch of huge bottom-line beats, with a 200% average beat in the trailing four quarters.
Zacks estimates call for Dave & Buster's third quarter revenue to soar 191% to help it swing from an adjusted loss of $1.01 a share last year to +$0.10 a share. Overall, its FY21 revenue is projected to climb 204% to roughly match its pre-pandemic total at $1.33 billion. Meanwhile, it’s expected to report +$2.24 a share in adjusted earnings vs. a loss of -$4.70 per share last year.
Dave & Buster's is then projected to follow up its huge comeback with 25% higher earnings and 18% stronger revenue, which would mark its best top-line growth as public firm—aside from its easy-to-compare FY21. Plus, its longer-term positive earnings revisions activity helps it land a Zacks Rank #1 (Strong Buy) right now.
Other Fundamentals
U.S. consumers are flexing their muscles despite rising prices. New data out Tuesday showed U.S. retail sales jumped a seasonally adjusted 1.7% in October vs. September. This topped expectations and it is possibly a sign of more good things to come in the vital holiday shopping period. In fact, J.P. Morgan announced it was raising its U.S. GDP forecast for Q4.
Despite Dave & Buster's strong outlook and the broader hunger among many U.S. consumers to spend heavily in the face of inflation, PLAY shares are down 20% from their 12-month highs in March. Some of the blame could be placed on the fact that it soared off its covid lows and climbed after the initial vaccine news.
Investors should also know that Dave & Buster's CEO announced his retirement in September and the firm is still in the process of finding his non-interim replacement. And PLAY stock is rather heavily shorted at the moment, at around 12% of the public float.
Bottom Line
PLAY is currently stuck in a channel between its 50-day and 200-day moving averages. The stock did pop 1.8% to $39.04 a share at the end of regular trading hours Wednesday.
This gives it 30% upside before it would run into its current Zacks consensus price target of $51 a share and even more before it returns to its 2017 and 2018 levels of over $65 a share. And Dave & Buster's trades at a huge discount compared to its industry’s 27.2X average at 14.3X forward 12-month earnings.
Overall, some investors might want to take a chance on Dave & Buster’s stock at the moment. And Wall Street remains rather high on the stock, with six of the nine brokerage recommendations Zacks has at "Strong Buys."