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Investing.com - BMO Capital has reiterated its Outperform rating and $35.00 price target on Dave & Buster’s (NASDAQ:PLAY) despite the company’s recent earnings miss.
The entertainment and dining chain reported second-quarter fiscal 2025 EBITDA of $130 million, falling $12 million below consensus estimates due to softer comparable sales and approximately $9 million in expenses that are not expected to recur in the second half of fiscal 2025. InvestingPro analysis reveals the company operates with a significant debt burden, with a debt-to-equity ratio of 23.7x, while quickly burning through cash.
Comparable sales declined 3.0% versus consensus expectations of a 2.2% drop, though this represented a 530 basis point sequential improvement. Quarter-to-date comparable sales are tracking down 3%-4%, but BMO notes that year-over-year comparisons will ease meaningfully for the remainder of fiscal 2025.
BMO Capital has conservatively lowered its estimates for Dave & Buster’s while maintaining its Outperform rating and $35 price target, which is now based on a rolling methodology to fiscal 2026.
The firm expressed optimism that the new CEO will combine "sound strategic priorities with improved execution" during a period of easier comparisons, while noting that the stock’s valuation "remains depressed."
In other recent news, Dave & Buster’s Entertainment Inc. reported its earnings for the second quarter of 2025, revealing a shortfall in both earnings per share and revenue compared to analyst forecasts. The company posted an EPS of $0.40, which was significantly below the expected $0.95, marking a 57.89% negative surprise. Revenue came in at $557 million, slightly under the anticipated $565 million. These results were disappointing for investors who rely on such metrics for their investment decisions. Despite the earnings miss, the stock showed resilience in aftermarket trading. Analysts had projected higher figures, indicating a gap between expectations and actual performance. The company’s performance in this quarter has been a focal point for investors and analysts alike.
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