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Dave & Buster's Stock Climbs on Earnings Beat, Price-Target Boosts

Dave & Buster's 'brand is back,' the CEO says following its second-quarter earnings beat.
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Dave & Buster's Entertainment  (PLAY)  surged Friday after the entertainment and restaurant chain beat Wall Street's second-quarter earnings expectations and received price-target boosts from analysts.

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Shares of the Dallas company at last check were up 6.4% at $37.71.

For the quarter ended Aug. 1 Dave & Buster's posted quarterly earnings of $1.07 a share. That nearly doubled the FactSet consensus estimate of 58 cents a share, and swung from a year-earlier loss of $1.19 a share.

Revenue totaled $377.6 million, more than seven times the pandemic-hammered year-earlier figure and coming in ahead of Wall Street's call for $358.5 million.

“Dave & Buster’s second quarter was clear evidence that the brand is back, posting record revenues and Ebitda with all 142 stores open as of the end of the quarter," Chief Executive Brian Jenkins said in a statement.

Analysts reacted enthusiastically to the earnings beat.

BMO Capital analyst Andrew Strelzik cited the company's earnings when he raised his price target on Dave & Buster's to $58 a share from $54 while affirming an outperform rating, according to the Fly. 

The analyst said in a research note that despite the quarter-to-date moderation around weather and Covid-19, the company's business trajectory remains upward. 

At six times expected fiscal 2022 Ebitda, the valuation on Dave & Buster's stock is "attractive," Strelzik said.

Truist analyst Jake Bartlett raised his price target on the shares to $56 from $54, while reiterating his buy rating.

Bartlett said the company's sales "demonstrate strong demand and its improved marketing approach, and its strong margins demonstrate its structural cost advantages and new efficiencies."

The news is a sharp contrast to a year earlier, when the company was reeling from the pandemic shutdown. It planned job cuts and warned that it might have to file for bankruptcy proceedings.

Bartlett last month upgraded the company to buy from hold with a $54 price target, saying he saw the company's recovery progressing.

Dave & Buster's also reported stronger-than-expected first-quarter results in June.