Dave & Buster’s (PLAY) Q1 Earnings Drop: Will the Arcade Giant Level Up or Game Over?

Wall Street braces for Dave & Buster’s earnings reveal—will they hit the jackpot or run out of tokens?

Analysts watch for same-store sales slumps and whether management blames 'macro headwinds' (again).

Bonus finance jab: If earnings miss, expect the classic 'strategic reinvestment' spin—corporate speak for 'we’re losing money, but it’s totally part of the plan.'

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Revenue is expected to decline 3% to $570.3 million.

Earlier this year, the company admitted making some “significant and ill-advised changes” to marketing, food and beverage, operations, remodels, and games investments under the previous leadership. Dave & Buster’s is now trying to revive its business by rectifying these mistakes and pursuing a “back to basics” strategy.

Analysts’ Views Ahead of PLAY’s Q1 Earnings

Heading into the Q1 results, Raymond James analyst Brian Vaccaro reiterated a Hold rating on Dave & Buster’s Entertainment stock. The 5-star analyst lowered his Q1 FY25 and full-year estimates. He now expects PLAY’s Q1 FY25 comparable sales to decline by 8% compared to the prior estimate of a 6.5% drop, based on his firm’s analysis of third-party traffic data and weak comparable sales trends reported by several “eatertainment concepts” in recent months.

Vaccaro contends that while cost savings could offer some insulation, he thinks that investor focus will remain on Dave & Buster’s weak top-line trends and any further changes in the company’s unit growth plans due to its modest free cash FLOW and elevated balance sheet leverage (net debt/EBITDA of about 3.5x). The analyst also expects the company to provide an update on its search for a new CEO.

Meanwhile, Truist analyst Jake Bartlett increased his price target for PLAY stock to $22 from $18 but maintained a Hold rating. The 5-star analyst highlighted that, according to Truist Card Data, sales trends improved in April and May compared to February, but only modestly, despite the new games, TV advertising, new menu items, and improved weather. While trends seem to have improved further in May, the analyst cautioned that growth rates in the data remain volatile.

Options Traders Anticipate a Notable Move on Dave & Buster’s Q1 Earnings

Using TipRanks’ Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. The expected earnings MOVE is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. If this sounds complicated, don’t worry, the Options tool does this for you.

Indeed, it currently says that options traders are expecting about a 17% move in either direction in PLAY stock in reaction to Q1 FY25 results.

Is PLAY a Good Stock to Buy?

Overall, Wall Street has a Hold consensus rating on Dave & Buster’s Entertainment stock based on two Buys and six Holds. The average PLAY stock price target of $25.40 indicates a modest upside potential of about 6.5% from current levels.