Stock surge of 17% for Dave & Buster's over the past week
Dave & Buster's, the popular mixed restaurant and entertainment venue chain, is showing signs of a comeback, with its business shifting back towards growth as early as 2022. The company's recent earnings update reveals a significant bounce back from the worst of the pandemic, although it has yet to fully recover to pre-pandemic levels.
The update includes three important time periods to consider: the first quarter of 2022, the fourth quarter of 2021, and a comparison to the same periods in 2019. In the first eight weeks of the first quarter of 2022, Dave & Buster's comparable store sales increased by 5.4% compared to the same period in 2019, demonstrating a positive trend. However, the fourth-quarter 2021 sales were lower by 1.2% compared to the fourth quarter of 2019.
Despite the ongoing threat of the Omicron coronavirus variant, the strength in Dave & Buster's business is evident. This resilience has caught the attention of investors, who have taken a positive view of the company following its earnings release this week. As a result, Dave & Buster's shares rose 17% at their highs this week.
The recent performance of Dave & Buster's is considered to be pretty good, but the future remains uncertain due to another variant on the horizon. The increase in Dave & Buster's shares shortly after their Q4 2021 earnings release was likely driven by improving investor sentiment and favorable analyst outlooks following the results and subsequent company developments.
Analysts have recently upgraded Dave & Buster's price targets and ratings, reflecting confidence in the company’s growth potential. For example, BMO Capital Markets raised its target from $30 to $35 with an "outperform" rating, and Loop Capital increased targets to as high as $46 with "buy" ratings. Multiple analysts have raised price targets and maintain hold to buy ratings overall.
The company’s quarterly earnings have shown mixed but improving signals. The latest reported quarter showed EPS slightly missing estimates and revenues slightly below consensus, but with a strong return on equity indicating efficient capital use. Revenue declines compared to last year are being offset by operational improvements and growth initiatives.
Recent stock performance shows positive momentum, including volume increases and a short-term rising trend signaling optimism about medium-term growth. The stock is forecasted to rise about 70% in the next 3 months within a strong upward trend. Insider buying by CEO Tarun Lal in July 2022 signals management confidence in future prospects.
Market factors influencing the increase also included favorable overall market conditions supporting consumer discretionary and entertainment stocks, contributing to rises as recently as August 2022 where the stock gained 8.4% in one session.
Analysts project growing earnings per share, with estimates around 2.52 EPS for the current fiscal year, indicating expected profit growth. Price targets in the range of $30–$46 imply solid upside from current prices near $25–$33, driven by recovery in discretionary spending and successful company initiatives to expand and improve operations. Technical analysis suggests continued upward momentum in the short to medium term despite occasional volatility.
In summary, the share price increase after Q4 2021 and into 2022 stems from positive analyst revisions, insider confidence, improving financial performance, and technical market signals. The outlook for Dave & Buster’s growth is cautiously optimistic with expected earnings growth and price appreciation supported by fundamental and market trends. The stock symbol for Dave & Buster's is PLAY.
- The increase in Dave & Buster's shares following their Q4 2021 earnings release was likely driven by improving investor sentiment, favorable analyst outlooks, and insider buying, such as CEO Tarun Lal's purchase in July 2022.
- Analysts have recently upgraded Dave & Buster's price targets and ratings, with BMO Capital Markets raising its target from $30 to $35 and Loop Capital increasing targets to as high as $46, indicating confidence in the company’s growth potential.
- The outlook for Dave & Buster’s growth is cautiously optimistic, with projected growing earnings per share and price appreciation supported by fundamental and market trends. The stock symbol for Dave & Buster's is PLAY.
- Market factors, such as favorable overall market conditions supporting consumer discretionary and entertainment stocks, have also played a role in the recent stock performance increases, contributing to rises as recently as August 2022.
