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What’s Dave & Buster’s Valuation?

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Forward PE

As of April 3, 2018, Dave & Buster’s (PLAY) was trading at a 12-month forward PE (price-to-earnings) multiple of 14.6x. Dave & Buster’s Entertainment is trading at a lower PE compared to peers. Jack in the Box (JACK) and Dunkin Brands (DNKN) are trading at 12-month forward PE ratios of ~17.7x and 21.7x, respectively. Plus, larger peers like Darden Restaurants (DRI) and McDonald’s (MCD) are trading at 12-month forward PEs of 15.9x and 20.7x, respectively, as of April 3, 2018.

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Analyst estimates

Analysts project that Dave & Buster’s fiscal 2018 revenues will be up ~10% to $1.3 billion, while the company’s EPS is expected to be up 3.8% to $2.70 on an adjusted basis. In comparison, for Jack in the Box, analysts expect fiscal 2018 revenues to be down 43.4% to $879.5 million, but adjusted EPS is projected to be up 1.0% to $3.92.

Analysts estimate Dunkin’ Brands to report revenue growth of 53.2% to $1.3 billion for fiscal 2018, while adjusted EPS is expected to be up 8.2% to $2.63. For fiscal 2018, Darden Restaurants’ revenues are expected to be up 12.6% to $8.1 billion, and adjusted EPS is expected to be up 18.9% to $4.78. For fiscal 2019, revenue is estimated to increase 4.6% to $8.5 billion, while adjusted EPS is expected to be up 13.1% to $5.41.

For McDonald’s, analysts project a 7.7% decline in revenue to $21.1 billion, while adjusted EPS is expected to be up 13.8% to $7.58 for 2018.

Most of the analysts are more bullish on Dunkin’ Brands, as the company continues to focus on innovation as well as opening new restaurants. Plus, the company’s loyalty programs are also driving sales. The company’s focus on the mobile platform to drive sales remains a long-term growth driver. On the other hand, projections for McDonald’s revenue performance remain muted, as analysts worry that customers might migrate to the company’s cheaper menu offerings launched on January 1, 2018.

In the concluding part of this series, we’ll take a look at what analysts have to say about Dave & Buster’s stock.

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