Dave & Buster's Impresses Where It Matters

As Dave and Buster’s Rg PLAY continues to exceed market expectations, BMO Capital Markets analyst Andrew Strelzik has reiterated his Outperform rating, and raised his price target from $64 to $77.

4 Key Takeaways From Q1

• Sales increased by 16 percent
• Margins increased to 35.4 percent
• Operating margin improved by 150 basis points

1. Strelzik doesn't anticipate the lagging food/beverage comps affecting Dave and Buster’s, as its growth and margin expansions created by its amusement business will offset it. He also noted how food and beverage comps were the only disappointment in the past quarter.
2. Strelzik believes upside potential with guidance still remains and the stock appears to be well set-up for it.
3. “Not only has PLAY exceeded consensus EBITDA every quarter since its IPO, but we also believe there are incremental margin opportunities throughout the income statement,” said Strelzik.
4. Dave and Buster's free cash flow generation could be another key factor in the growth story as it increased by $50 million over the past year.

Dave and Buster’s was trading up around 2.5 percent at $71.95.

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