2024-07-05 12:15:38 ET
Summary
- Markets are momentum driven, favoring stocks going up regardless of valuation or business fundamentals. PLAY trades less than 6X EV/ adjusted EBITDA and has mid 20% adjusted EBITDA margins.
- Dave & Buster's Entertainment shares have been stagnant for five years despite strong operating results, presenting a buying opportunity at $38 per share.
- PLAY has plenty of growth ahead driven by new units, international franchising, and store remodeling.
If people are actually paying attention, circa July 2024, markets are exceptionally momentum driven. I'm not sure if this is simply a function of massive pools of capital, collectively deploying similar strategies because momentum have been working so well, or if we can throw out all the textbooks and everything we learned in B School. Although I think it's probably the former, if it's the latter, that would mean the great works, such as Graham and Dodd and many others, need to be swept into the dustbin of history. Either way, it feels accurate to make the statement that old-school, bottoms-up analyses, including speaking with management teams, and underpinned by buying proportional stakes in businesses, at attractive valuation relative to normalized EPS or EBITDA power, is out of favor. Markets feel so short-term driven that it is "as if" people only want to buy stocks that are going up, regardless of valuation, and regardless of what they do, as an actual business.
Despite how markets are currently geared, and have been geared for a few years now, with growth dramatically outpacing value, I continue to march forward, one foot at a time, even if progress seems limited, and when quest can seem quixotic. Therefore, today, I write to share a "Jumping Up and Down Strong Buy" - Dave & Buster's Entertainment, Inc. ( PLAY ), at $38 Per Share. ...
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Dave & Buster's: A Jumping Up And Down Strong Buy At $38