Dave and Buster’s Entertainment, Inc. (NASDAQ: $PLAY) is a well-known American restaurant and entertainment chain based in Dallas, TX. Founded in 1982, it has grown into one of the most popular restaurant chains across America and Canada. The company often hosts special events, offers promotions, and provides a fun environment for guests to enjoy food, drinks, and games.
On Tuesday, April 2, 2024, the company released its Q4 and fiscal year 2023 results for the year ended February 4, 2024, to a positive market reaction.
Dave & Buster’s Fourth Quarter Results
In the fourth quarter of fiscal 2023, the company recorded a revenue of $599.1 million, a 6.3% increase compared to last year’s fourth quarter. Moreover, the comparable store sales, including Main Event branded stores, declined by 7.0% compared to the corresponding period in 2022 but rose by 8.0% compared to the same period in 2019.
The company reported a $36.2 million net income, or a $0.88 EPS, an 8.01% increase from Q422 net income of $39.1 million, or $0.80 EPS. The adjustment income increased by 0.48% compared to 2022, to $42 million or adjusted EPS of $1.03.
The adjusted EBITDA came to $151.8 million, an increase of 9.7% compared to 2022, or an adjusted EBITDA margin of 25.3%.
Fiscal Year 2023 Results
Full-year revenue increased by 12.3% compared to 2022, totaling $2.2 billion. The net income declined 8.04% compared to 2022, to $126.9 million or a $2.79 EPS. Adjusted net income amounted to $156.9 million, or adjusted EPS of $3.57, a decline from the adjusted net income of $159.1 million, or adjusted EPS of $3.23 reported in fiscal 2022.
Additionally, full-year EBITDA increased 15.7% compared to 2022, to $555.6 million for an adjusted EBITDA margin of 25.2%.
Dave & Buster’s Full Year Achievements
The company inaugurated 16 new Dave and Buster’s stores in the fourth quarter of 2023, including 11 Dave and Buster’s and five Main Events for fiscal 2023. The company also completed test remodels for nine Dave and Buster’s stores.
Furthermore, Dave and Buster’s also bought back 8.5 million shares in fiscal year 2023 worth $300 million, representing 17.5% of the company’s outstanding shares as of the end of fiscal 2022. The board has expanded its authorization for share repurchases by an extra $100 million, raising the total available authorization for share repurchases to $200 million.
Additionally, the company has announced an international franchise agreement to develop two stores in the Dominican Republic. Thus far, the company has entered into several such agreements to develop 33 stores across six countries, with up to four of these stores set to open in the next 12-18 months.
CEO Comments
The CEO of Dave and Buster’s, Chris Morris, said, “Fiscal 2024 is set up to be a transformative year for our company with the anticipated opening of an additional 15 new domestic stores, the opening of up to four new international D&B units, our continued focus on cost efficiency and Adjusted EBITDA margin improvement and our continued progress on our organic revenue growth initiatives, including our remodels which have outperformed our expectations and in which we are accelerating the portfolio wide roll-out.”
He added, “Despite the uncertain macroeconomic backdrop, everything we have seen and learned in the last several months has only strengthened our resolve and our confidence in our ability to achieve the $1 billion Adjusted EBITDA target in the coming years.”
PLAY Stock Performance
A few minutes before the closing bell, PLAY shares were trading at $68.29, a 10.31% increase from the previous closing price. The company has a market cap of $2.78 billion, with a 24-hour trading volume of 5,148,461. Year-to-date, PLAY shares have gained 25.95%, while in the past 52 weeks, they are up 85.02%, beating the S&P 500, which has gained 27.27% in the same period.
Should You Buy PLAY Stock?
Four Wall Street analysts give PLAY stock an overall moderate buy rating. They forecast a broad range for the stock, with a high of $80 and a low of $60. Their average forecast is $71.67, a 4.95% upside based on the most recent price.
In its Q4 results, Dave & Buster’s revealed several strategic initiatives that could boost its sales in the coming months. Additionally, it posted robust Q4 and FY23 that exceeded expectations. On a medium-term basis, these bode well for the company’s future. Consequently, the cautious buy rating by analysts is an accurate representation of the stock’s medium-term future.
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