Here's Why Dave & Buster's Entertainment (NASDAQ:PLAY) Has Caught The Eye Of Investors
The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Dave & Buster's Entertainment (NASDAQ:PLAY). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.
Check out our latest analysis for Dave & Buster's Entertainment
How Fast Is Dave & Buster's Entertainment Growing Its Earnings Per Share?
Over the last three years, Dave & Buster's Entertainment has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. Thus, it makes sense to focus on more recent growth rates, instead. It's good to see that Dave & Buster's Entertainment's EPS has grown from US$2.55 to US$3.03 over twelve months. This amounts to a 19% gain; a figure that shareholders will be pleased to see. EPS has grown further thank to a share buyback. A great indicator of a healthy balance sheet.
It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. EBIT margins for Dave & Buster's Entertainment remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 25% to US$2.2b. That's encouraging news for the company!
You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.
The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. While crystal balls don't exist, you can check our visualization of consensus analyst forecasts for Dave & Buster's Entertainment's future EPS 100% free.
Are Dave & Buster's Entertainment Insiders Aligned With All Shareholders?
Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. Of course, we can never be sure what insiders are thinking, we can only judge their actions.
Although we did see some insider selling (worth US$228k) this was overshadowed by a mountain of buying, totalling US$1.2m in just one year. This adds to the interest in Dave & Buster's Entertainment because it suggests that those who understand the company best, are optimistic. It is also worth noting that it was Senior VP and Chief Technology & Information Officer Steven Klohn who made the biggest single purchase, worth US$503k, paying US$35.22 per share.
The good news, alongside the insider buying, for Dave & Buster's Entertainment bulls is that insiders (collectively) have a meaningful investment in the stock. Given insiders own a significant chunk of shares, currently valued at US$60m, they have plenty of motivation to push the business to succeed. That's certainly enough to let shareholders know that management will be very focussed on long term growth.
Is Dave & Buster's Entertainment Worth Keeping An Eye On?
One positive for Dave & Buster's Entertainment is that it is growing EPS. That's nice to see. In addition, insiders have been busy adding to their sizeable holdings in the company. That makes the company a prime candidate for your watchlist - and arguably a research priority. You still need to take note of risks, for example - Dave & Buster's Entertainment has 2 warning signs (and 1 which shouldn't be ignored) we think you should know about.
There are plenty of other companies that have insiders buying up shares. So if you like the sound of Dave & Buster's Entertainment, you'll probably love this free list of growing companies that insiders are buying.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
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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.
