Lucky Strike Entertainment Stock Dips 19% in 3 Months: How to Play It?

Lucky Strike Entertainment Corporation LUCK stock has declined 18.6% over the past three months compared with a 20.8% fall in the industry. In the same time frame, the S&P 500 plummeted 14.7%.

LUCK Trades 43% Below Its 52-Week High

The stock closed at $8.50 on Friday, well below its 52-week high of $14.92 but above its 52-week low of $7.70. However, LUCK has outpaced other industry players like United Parks & Resorts Inc. PRKS, Six Flags Entertainment Corporation FUN and Rush Street Interactive, Inc. RSI.

Price Performance
 

The recent decline can be primarily attributed to market volatility and concern regarding discretionary spending, which remains under pressure for certain guests. Wildfires in Los Angeles disrupted operations and reduced January corporate events, resulting in a $5-million revenue impact.

In the second-quarter fiscal 2025 conference call, the company highlighted minor exposure to potential tariffs, especially on imported arcade merchandise, and expressed concern over how tariffs could affect consumer sentiment.

Despite the stock's recent decline, the company’s robust fundamentals and analysts' upward earnings estimate revisions bode well. Let us delve deeper.

Factors Likely to Aid Lucky Strike Entertainment

LUCK is likely to benefit from stable retail walk-in traffic, the latest openings, rebranding strategy, menu innovation and operational efficiencies.

Despite an uncertain economic environment, LUCK maintained stable retail walk-in traffic in second-quarter fiscal 2025. The company believes its value-oriented entertainment offering benefited from consumer trade-down behavior as people sought affordable alternatives to luxury or international travel.

The opening of several locations is aiding the company. In second-quarter fiscal 2025, it opened two in Denver, one in Beverly Hills and one in Ladera Ranch. Both Beverly Hills and Ladera Ranch centers generated more than $1 million in revenues in their first 30 days, setting company records and showcasing strong demand for the refreshed concept.

The company has begun converting existing centers into the Lucky Strike brand, with four conversions completed and plans to reach around 75 by the year-end. These rebranded locations offer elevated hospitality, redesigned interiors, and upgraded amusements and menus, which the company claims differentiate it from competitors.

Cost controls and capital discipline positioned the company to drive EBITDA leverage once revenue stabilizes. New centers and seasonal parks (Boomers and Raging Waves) are expected to be significant EBITDA contributors in upcoming quarters.

LUCK’s Upward Estimate Revisions Signal Strength

Analysts are growing increasingly optimistic about Lucky Strike Entertainment’s earnings potential. Over the past 60 days, the Zacks Consensus Estimate for LUCK’s fiscal 2025 EPS has risen from 40 cents to 53 cents, reflecting a positive shift in sentiment.

The company is poised for robust earnings growth, with projections indicating a 431.3% upsurge in fiscal 2025. Conversely, industry players like United Parks & Resorts, Six Flags Entertainment and Rush Street Interactive earnings in 2025 are likely to witness growth of 19.4%, 84.6% and 100% year over year, respectively.

Lucky Strike Entertainment Trades at a Discount

LUCK is trading at a discount on a forward 12-month price-to-sales (P/S) ratio basis. Lucky Strike Entertainment’s forward 12-month P/S ratio stands at 0.94X, lower than the industry. Then again, other industry players like United Parks & Resorts, Six Flags Entertainment and Rush Street Interactive’s P/S ratios stand at 1.3, 0.91 and 2.13, respectively.

LUCK P/S Ratio (Forward 12 Months)

End Note

Lucky Strike Entertainment appears to be navigating a challenging environment, marked by market volatility, consumer spending concerns and operational disruptions. While recent stock performance has been weak, the company’s solid core, bolstered by stable walk-in traffic, store openings and a successful rebranding push, suggests resilience. Analysts are increasingly optimistic about its earnings outlook, reflecting confidence in its strategic direction and ability to drive growth.

However, given the ongoing macroeconomic headwinds, fresh buying may be restricted. LUCK currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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