Dave & Buster’s Spins the Wheel With a $100 Million Stock Repurchase – Buyback Wednesdays

Since we last covered the “eatertainment chain” Dave & Buster’s in a Buyback Wednesdays article in April 2023, a lot has changed at the company, warranting a fresh examination. Over this period, the stock dropped from $35 to the $29 range, reflecting a ~21% decline. We saw C-suite changes, rapid store expansion and fast-paced remodeling of existing stores.

Insiders have purchased shares on the open market and the company has been buying back its own stock. This “double dipper” scenario (insider buying + buybacks), coupled with a high short interest (17.91% of float) and a recently announced $100 million buyback plan makes this an interesting setup.

If you haven’t been to Dave & Buster’s, this video provides a great walk through.

Over the past year, the stock has underperformed significantly, lagging behind the S&P 500’s 24% gain. Shares are down 20% over the last six months and have dropped sharply from their April 2024 peak of $68.29, driven by back-to-back weak quarterly earnings and the abrupt departure of the CEO.

Dave & Buster’s Entertainment, Inc. (PLAY): $29.48

Market Cap: $1.14B

EV: $2.73B

Key Insights

• D&B’s shares fell 13% after missing guidance and the unexpected resignation of its CEO.
• Active stock buybacks (20% in 3 years) and Hill Path Capital’s ongoing involvement point to the stock being potentially undervalued.
• Significant investments in remodeling and new store openings put pressure on free cash flow and increased reliance on debt, raising concerns about future financial stability.

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