Sign In  |  Register  |  About San Rafael  |  Contact Us

San Rafael, CA
September 01, 2020 1:37pm
7-Day Forecast | Traffic
  • Search Hotels in San Rafael

  • CHECK-IN:
  • CHECK-OUT:
  • ROOMS:

Dave & Buster’s Rebound Could Score for Investors

Dave & Buster's stock

Dave & Buster's Entertainment Inc. (NASDAQ: PLAY) has been working hard to improve its operations and growth capability since the pandemic began. The restaurant rebound has helped drive revenue and earnings to levels well above pre-pandemic times. 

In this light, Dave & Buster's stock trades at a deep value, echoing analysts' sentiment. The analysts lowered their targets following the third-quarter results, which may happen again now that fourth-quarter results are in, but the takeaway from their chatter is bullish. The analysts lowered their targets to a level where consensus expects a nearly 40% upside for share prices, and the stock is rated a "buy." 

Dave & Buster's Knocks it Out of the Park 

Dave & Buster's had a stellar fourth quarter, driven by organic growth, the acquisition of Main Event and a return of special event traffic. The company reported a record $563.7 million in quarterly revenue, a gain of 64.3% compared to last year. The revenue beat consensus by more than 300 basis points and is up 62% compared to 2019. The adjusted revenue growth, accounting for the acquisition of Main Event, is 28% year-over-year (YOY) and 30% compared to 2019, another strong figure. On a comp basis, store sales are up 19% across the network, with walk-ins up 12% and special event sales up 90%.

Margin news is favorable. The restaurant-operating income improved by 50 basis points to 30% of revenue, driving a similar increase in the company's operating margin. On the bottom line, the 80 cents in adjusted EPS is up 53% YOY, causing a healthy liquidity position for the company. The company's liquidity improved to $672 million, including $181 million in cash, with healthy cash flows expected to continue. The board declared a share repurchase program worth $100 million to investors, or about 5.7% of the post-release market cap. 

Is a Dividend Cooking? 

Dave & Buster's initiated a dividend in 2018 but had to suspend it in 2020 when the pandemic struck. That was a good move that helped to preserve capital in a time of need, but that time is over. The company is larger than before, with improved revenue-generating ability and healthy cash flow. The balance sheet is a fortress with ample liquidity, enough to initiate a share repurchase program so that the dividend may return soon. The former payout of 16 cents quarterly is worth about 1.7% annually, which would catalyze higher share prices. 

The charts show Dave & Buster's market trading near the bottom of a long-term trading range but showing signs of rebounding. The stock is up following the fourth-quarter release and offers support at the high end of the $30 to $33 range, a higher level than previously and a bullish indication within the trading range. 

The next hurdle is the 150-day exponential moving average (EMA). If the market can get above that, a move to the top of the range is possible. The top of the range is near $50, consistent with the Marketbeat.com analyst consensus estimate. 

Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.
 
 
Copyright © 2010-2020 SanRafael.com & California Media Partners, LLC. All rights reserved.