It has been about a month since the last earnings report for Dave & Buster's (PLAY). Shares have lost about 6.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Dave & Buster's due for a breakout? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent drivers for Dave & Buster's Entertainment, Inc. before we dive into how investors and analysts have reacted as of late.
Dave & Buster's Q2 Earnings & Revenues Miss Estimates
Dave & Buster's Entertainment reported lower-than-expected second-quarter fiscal 2025 results, with earnings and revenues both missing the Zacks Consensus Estimate. The top line increased slightly on a year-over-year basis, while the bottom line declined from the prior year.
Management expressed confidence in the company’s long-term potential, even as fiscal second-quarter results missed expectations. The business model remains profitable, with new store openings expected to deliver high returns, strong unit-level economics, disciplined cost management and healthy free cash flow generation.
PLAY continues to face challenges related to value perception, comparable sales, margin and cost pressures. However, targeted initiatives are showing early progress, including menu innovation, the launch of new arcade titles, remodel programs with stronger marketing support and the rollout of a lower-cost prototype. Backed by disciplined capital management and solid momentum in special events, management remains cautiously optimistic that these efforts will help stabilize performance and drive long-term shareholder value.
Dave & Buster’s Q2 Earnings & Revenues
For the fiscal second quarter, the company reported adjusted earnings per share (EPS) of 40 cents, missing the Zacks Consensus Estimate of 88 cents. In the year-ago quarter, it posted an adjusted EPS of $1.12.
Quarterly revenues totaled $557.4 million, missing the consensus mark of $562 million. The top line increased 0.5% from $557 million reported in the prior-year quarter.
Food and Beverage revenues (34.6% of total revenues in the reported quarter) increased 6.3% year over year to $192.9 million. Our estimate was $182.1 million.
Entertainment revenues (65.4%) fell 3% year over year to $364.5 million. Our estimate was $367.2 million. To strengthen cash flow, the company is prioritizing efficiency by cutting low-ROI projects and eliminating wasteful capital expenditures.
Comparable store sales (including Main Event-branded locations) declined 3% year over year. Sequentially, the company's sales at existing stores in the third quarter are moving in the same direction as they were when the second quarter ended.
Dave & Buster’s Q2 Operating Highlights
During the fiscal second quarter, operating income amounted to $53 million compared with $84.5 million reported in the year-ago quarter. Our estimate for the metric was $64.6 million.
Adjusted EBITDA in the quarter was $129.8 million compared with $151.6 million in the year-earlier quarter. Our estimate for the metric was $123.4 million. The EBITDA margin declined to 23.3% from 27.2% reported in the prior-year period.
Balance Sheet of PLAY
As of Aug. 5, 2025, cash and cash equivalents were $12 million compared with $6.9 million as of Feb. 4, 2025.
At quarter-end, net long-term debt was approximately $1.55 billion compared with $1.48 billion at the end of fiscal 2024. The company maintains available liquidity of $443.3 million, including its revolving credit facility.
Dave & Buster’s Store Development Updates
Dave & Buster’s continues to advance its growth initiatives through new store openings and remodels. During the fiscal second quarter, the company opened three new domestic stores, and after the second quarter ended, it opened one more Dave & Buster’s store in the United States and two more Main Event stores.
During the second quarter, PLAY launched its second franchise store in India. Looking ahead, the company plans to open at least five more international franchise stores within the next six months. It also completed three remodels as part of its store-refresh program.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -38.37% due to these changes.
VGM Scores
Currently, Dave & Buster's has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock has a score of A on the value side, putting it in the top 20% for value investors.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Dave & Buster's has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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Dave & Buster's Entertainment, Inc. (PLAY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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