Dave & Buster's Entertainment, Inc. (NASDAQ:PLAY) missed earnings with its latest first-quarter results, disappointing overly-optimistic forecasters.      Results showed a clear earnings miss, with US$588m revenue coming in 4.5% lower than what the analystsexpected. Statutory earnings per share (EPS) of US$0.99 missed the mark badly, arriving some 42% below what was expected.     This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business.  So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

NasdaqGS:PLAY Earnings and Revenue Growth June 16th 2024

Taking into account the latest results, the most recent consensus for Dave & Buster's Entertainment from nine analysts is for revenues of US$2.25b in 2025. If met, it would imply an okay 2.3% increase on its revenue over the past 12 months.       Statutory earnings per share are predicted to ascend 16% to US$2.88.        Before this earnings report, the analysts had been forecasting revenues of US$2.31b and earnings per share (EPS) of US$4.23 in 2025.        The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a pretty serious reduction to earnings per share numbers.    

It'll come as no surprise then, to learn that the analysts have cut their price target 16% to US$62.43.        That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets.  Currently, the most bullish analyst values Dave & Buster's Entertainment at US$75.00 per share, while the most bearish prices it at US$56.00.   As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.    

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates.     We would highlight that Dave & Buster's Entertainment's revenue growth is expected to slow, with the forecast 3.0% annualised growth rate until the end of 2025 being well below the historical 19% p.a. growth over the last five years.    By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 9.8% per year.  So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Dave & Buster's Entertainment.    

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Dave & Buster's Entertainment.        On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry.       The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Dave & Buster's Entertainment's future valuation.  

With that said, the long-term trajectory of the company's earnings is a lot more important than next year.   We have forecasts for Dave & Buster's Entertainment going out to 2027, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 3 warning signs for Dave & Buster's Entertainment (1 is concerning!) that you need to be mindful of.  

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com