PLAY - The Stock Market Loves Dave & Buster's But Here Are 2 Reasons For Caution
Investors seem pleased with Dave & Buster's Entertainment (NASDAQ: PLAY) as its metrics rebound from their lows a year ago when the COVID-19 pandemic and the government's drastic lockdowns and retail closures were in full swing. The restaurant chain has enjoyed a roughly 36% positive jump in its 2021 stock price, and over 151% during the past 12 months.
Yet it's still behind its financial position in 2019, when its stock price in June was very similar to today's, while heavily diluting its shares and taking on more debt. Its stock price seems hard to justify currently, and investors should be cautious about buying into the company at current prices, with two standout reasons to consider:
It's the contrast to the dark days of the early U.S. COVID-19 pandemic that is making Dave & Buster's first-quarter results shine. Revenue of $265.3 million soared 66% year over year compared to 2020's anemic $159.8 million, while at the bottom line, $19.6 million in net income yielded an adjusted $0.40 earnings per share (EPS), well above Q1 2020's $1.37 loss per share (adjusted).
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The Stock Market Loves Dave & Buster's, But Here Are 2 Reasons For Caution