Last week, you might have seen that Dave & Buster's Entertainment, Inc. (NASDAQ:PLAY) released its quarterly result to the market. The early response was not positive, with shares down 7.5% to US$38.86 in the past week. Sales of US$468m surpassed estimates by 8.2%, although statutory earnings per share missed badly, coming in 43% below expectations at US$0.59 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
After the latest results, the eight analysts covering Dave & Buster's Entertainment are now predicting revenues of US$1.94b in 2023. If met, this would reflect a major 23% improvement in sales compared to the last 12 months. Statutory per-share earnings are expected to be US$2.76, roughly flat on the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.86b and earnings per share (EPS) of US$3.30 in 2023. So it's pretty clear the analysts have mixed opinions on Dave & Buster's Entertainment after the latest results; even though they upped their revenue numbers, it came at the cost of a substantial drop in per-share earnings expectations.
There's been no major changes to the price target of US$54.44, suggesting that the impact of higher forecast sales and lower earnings won't result in a meaningful change to the business' valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Dave & Buster's Entertainment, with the most bullish analyst valuing it at US$66.00 and the most bearish at US$38.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Dave & Buster's Entertainment shareholders.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Dave & Buster's Entertainment's past performance and to peers in the same industry. One thing stands out from these estimates, which is that Dave & Buster's Entertainment is forecast to grow faster in the future than it has in the past, with revenues expected to display 50% annualised growth until the end of 2023. If achieved, this would be a much better result than the 1.3% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 13% annually. Not only are Dave & Buster's Entertainment's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Dave & Buster's Entertainment. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Dave & Buster's Entertainment going out to 2025, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Dave & Buster's Entertainment , and understanding this should be part of your investment process.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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