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1. Company Snapshot

1.a. Company Description

Dave & Buster's Entertainment, Inc.owns and operates entertainment and dining venues for adults and families in North America.Its venues offer a menu of entrées and appetizers, as well as a selection of non-alcoholic and alcoholic beverages; and an assortment of entertainment attractions centered on playing games and watching live sports, and other televised events.


The company operates its venues under the Dave & Buster's name.As of January 30, 2022, it owned and operated 144 stores located in 40 states, Puerto Rico, and one Canadian Province.The company was founded in 1982 and is headquartered in Coppell, Texas.

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1.b. Last Insights on PLAY

The recent 3 months performance of Dave & Buster's Entertainment, Inc. was negatively driven by dismal contributions from food and beverage and entertainment segments, resulting in revenue lag. The company's fiscal fourth-quarter revenues were impacted by disruptions due to remodeling construction at certain locations, leading to a decline in comparable sales. Additionally, the company's share buybacks have been criticized for being poorly timed, given its high leverage and negative free cash flow.

1.c. Company Highlights

2. Dave & Buster's Q3 Earnings: A Step in the Right Direction

Dave & Buster's reported revenue of $448 million in Q3, a net loss of $42 million or $1.22 per diluted share, and adjusted net loss of $39 million or $1.14 per diluted share, beating analyst estimates of $-1.16. The company's adjusted EBITDA was $59 million. The revenue figure was likely impacted by the 4% decrease in comparable store sales versus the prior year period. Despite this, the company's financial foundation remains strong, with $58 million in operating cash flow and $442 million in total liquidity.

Publication Date: Dec -20

📋 Highlights
  • Sequential Same-Store Sales Improvement:: Final month of Q3 saw a mere 1% decline, showing recovery from 4% annualized comp sales drop.
  • Food & Beverage Momentum:: New menu launched in October drove accelerated momentum, with 2nd consecutive quarter of positive comps.
  • Marketing Strategy Shift:: Focused on "smart value" combo offers (e.g., Eat & Play) instead of discounts, resonating with guests.
  • Operational Cost Optimization:: $58M operating cash flow generated, $442M total liquidity, and $59M adjusted EBITDA despite $42M net loss.
  • Game Innovation Pipeline:: 10+ IP-driven game launches planned for 2026, with current Midway spending up due to renewed guest engagement.

Operational Progress

Tarun Lal, CEO, highlighted the progress made on the "Back to Basics" plan, including the reconstruction of the marketing strategy, implementation of new food and beverage offerings, reinvigoration of field operations, and refresh of the games offering. The new menu test performed well, and the company launched the new menu in October, delivering strong results. The company is also focused on tightly aligning marketing campaigns with high-impact IP-driven game launches, with 10 new games planned for introduction throughout the year.

Marketing and Guest Experience

The company has seen success with "smart value offers" that package food, beverage, and games together, with Tarun Lal stating that these offers "allow our guests to appreciate and enjoy both our games and our games entertainment and our food and beverage offering." The company is also investing in the right level of innovation in the games area, with a pipeline of more than 10 games associated with strong IPs planned for 2026.

Valuation and Outlook

With a P/S Ratio of 0.28 and EV/EBITDA of 5.38, the market appears to be pricing in a relatively low growth trajectory for the company. Analysts estimate next year's revenue growth at -0.6%. However, with the company's strong brand awareness and efforts to revamp the guest experience, there may be opportunities for growth. The company's focus on margin enhancement initiatives and ability to manage and expand margins with flat to positive same-store sales growth is also a positive sign.

3. NewsRoom

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Dave & Buster's Entertainment Is An Exciting Turnaround That's In Play

Feb -17

Source: seekingalpha.com

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Dave & Buster's Reversal Is in PLAY After Double-Bottom Breakout

Dec -14

Source: marketbeat.com

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Can PLAY's Revamped Remodel Blueprint Catalyze Its Next Growth Cycle?

Dec -12

Source: zacks.com

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Dave & Buster's Q3 Earnings Beat, Revenues Miss Estimates

Dec -10

Source: zacks.com

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Dave & Buster's Entertainment, Inc. (PLAY) Q3 2026 Earnings Call Transcript

Dec -10

Source: seekingalpha.com

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Compared to Estimates, Dave & Buster's (PLAY) Q3 Earnings: A Look at Key Metrics

Dec -10

Source: zacks.com

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Dave & Buster's (PLAY) Reports Q3 Loss, Misses Revenue Estimates

Dec -09

Source: zacks.com

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Dave & Buster's Same-Store Sales Continue Decline as Third-Quarter Loss Widens

Dec -09

Source: wsj.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.54%)

6. Segments

Entertainment

Expected Growth: 9%

Dave & Buster's Entertainment, Inc.'s 9% growth in the Entertainment segment is driven by increasing demand for experiential entertainment, successful menu innovation, and strategic marketing efforts. Additionally, the company's focus on enhancing the guest experience through technology integration and remodels has contributed to higher sales and profitability.

Food

Expected Growth: 8%

Dave & Buster's Entertainment, Inc.'s 8% food segment growth is driven by increasing demand for experiential dining, successful menu innovation, and expansion of online ordering and delivery capabilities. Additionally, the company's focus on improving food quality, enhancing the guest experience, and investing in digital marketing initiatives contribute to the growth.

Beverage

Expected Growth: 7%

Dave & Buster's Entertainment, Inc.'s 7% growth in Beverage segment is driven by increasing demand for premium beverages, expansion of menu offerings, and strategic pricing. Additionally, the company's focus on enhancing the guest experience through innovative drink options and loyalty programs contributes to the growth.

7. Detailed Products

Food and Beverages

Dave & Buster's offers a wide variety of food and beverages, including burgers, sandwiches, salads, and appetizers, as well as a full bar with cocktails and other drinks.

Games and Entertainment

Dave & Buster's features a wide range of interactive games, including arcade games, sports games, and prize redemption games.

Events and Parties

Dave & Buster's offers private event spaces and catering services for corporate events, birthday parties, and other celebrations.

Sports Viewing

Dave & Buster's features large screens and projection TVs for watching live sports, including football, basketball, baseball, and more.

8. Dave & Buster's Entertainment, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Dave & Buster's Entertainment, Inc. faces moderate threat from substitutes, as customers have alternative options for entertainment, such as movie theaters, bowling alleys, and home-based gaming. However, the company's unique combination of food, drinks, and entertainment provides a differentiated experience that sets it apart from substitutes.

Bargaining Power Of Customers

Dave & Buster's Entertainment, Inc. has a low bargaining power of customers, as individual customers have limited negotiating power. The company's large customer base and diversified revenue streams also reduce the bargaining power of individual customers.

Bargaining Power Of Suppliers

Dave & Buster's Entertainment, Inc. has a low bargaining power of suppliers, as the company has a diversified supply chain and is not heavily dependent on a single supplier. The company's scale and purchasing power also give it an advantage in negotiating with suppliers.

Threat Of New Entrants

Dave & Buster's Entertainment, Inc. faces a moderate threat from new entrants, as the entertainment and hospitality industry is relatively easy to enter. However, the company's established brand, scale, and operational expertise create barriers to entry for new competitors.

Intensity Of Rivalry

Dave & Buster's Entertainment, Inc. operates in a highly competitive industry, with intense rivalry among entertainment and hospitality companies. The company must continually innovate and differentiate itself to maintain market share and competitiveness.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 84.37%
Debt Cost 5.16%
Equity Weight 15.63%
Equity Cost 14.35%
WACC 6.59%
Leverage 539.97%

11. Quality Control: Dave & Buster's Entertainment, Inc. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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A-Score: 3.0/10

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

14.52$

Current Price

14.52$

Potential

-0.00%

Expected Cash-Flows