PLAY Earnings: Dave & Buster’s Stock Declined on Q1 Miss

Dave & Buster’s Entertainment (NASDAQ:PLAY) reported lower-than-expected results for the first quarter of Fiscal 2024. The company’s performance was impacted by higher labor and marketing costs. Owing to weak results, PLAY stock declined about 12% in the extended trading session yesterday.

PLAY is a restaurant and entertainment company that offers a combination of dining, arcade games, and sports viewing experiences.

PLAY: Q1 Earnings Snapshot

The company reported adjusted earnings of $1.12 per share, which missed the consensus estimate of $1.73. Also, it compared unfavorably with EPS of $1.52 in the year-ago quarter. Moreover, Dave and Buster’s revenue decreased 1.5% year-over-year to $588.1 million and missed the consensus estimate of $615.88 million. 

Further, Dave & Buster’s comparable store sales, including the Main Event-branded outlets, were down 5.6% year-over-year due to a challenging macroeconomic environment.

Regarding store count, the company had 224 stores as of May 5, 2024. During Q1, PLAY opened three new stores under the brand name Dave & Buster’s and one new Main Event store. Importantly, the company plans to open about 15 new stores across both brands in Fiscal 2024. With this move, PLAY aims to capture a larger customer base and potentially drive revenue growth.

Is PLAY a Good Stock to Buy?

Dave and Buster’s expects to achieve an adjusted EBITDA of $1 billion in the near term by focusing on store remodeling. However, rising costs due to these initiatives are expected to keep the company’s bottom line under pressure.

Currently, Wall Street is cautiously optimistic about PLAY. It has a Moderate Buy consensus rating based on four Buy and three Hold recommendations. After a year-to-date decline of nearly 7%, the analysts’ average price target on Dave and Buster’s stock of $74.17 per share implies another 47.3% upside potential.

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