Dave & Buster's Stock: Is Now the Time to Make a PLAY?

Core Viewpoint - Dave & Buster's Entertainment reported tepid revenue growth and significant earnings contraction in its FQ2 earnings, but there are signs of potential recovery with a new CEO and ongoing turnaround efforts [1][2][5]. Financial Performance - The Q2 revenue growth was minimal at 0.05%, which is 100 basis points below consensus expectations, but it marks the end of several quarters of contraction [7]. - Significant margin contraction was observed, starting at the gross level and worsening at the operating level due to increased input and operating costs, new store openings, and the turnaround efforts [5]. - Despite the challenges, the company managed to sustain financial health while reinvesting and buying back shares, with buybacks equating to nearly 3% of the market cap for the quarter, reducing the share count by approximately 14% compared to last year [8]. Management and Strategy - The appointment of Tarun Lal, a 25-year KFC veteran, as the new CEO is seen as a positive move that aligns with the company's priorities and could accelerate the turnaround [2][3]. - The company is expected to continue its sale-leaseback program, which has bolstered its cash position and allowed for aggressive share repurchases [9][10]. Market Outlook - Analysts have set a 12-month stock price forecast for Dave & Buster's at $31.33, indicating a potential upside of 47.90% from the current price [11]. - The stock has been under pressure, but with falling short interest and strong institutional interest, the downtrend may be nearing its end [11][12]. - The international market is expected to grow over time, contributing to a mid-to-high single-digit growth pace for the company [10].