Dave & Buster's Entertainment, Inc. Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

It's been a good week for Dave & Buster's Entertainment, Inc. (NASDAQ:PLAY) shareholders, because the company has just released its latest second-quarter results, and the shares gained 4.3% to US$31.57. It looks like a credible result overall - although revenues of US$557m were in line with what the analysts predicted, Dave & Buster's Entertainment surprised by delivering a statutory profit of US$0.99 per share, a notable 16% above expectations. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Dave & Buster's Entertainment

Following last week's earnings report, Dave & Buster's Entertainment's nine analysts are forecasting 2025 revenues to be US$2.19b, approximately in line with the last 12 months. Statutory earnings per share are expected to shrink 7.7% to US$2.64 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.23b and earnings per share (EPS) of US$2.64 in 2025. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

The consensus price target fell 15% to US$50.14, suggesting that the analysts might have been a bit enthusiastic in their previous valuation - or they were expecting the company to provide stronger guidance in the quarterly results. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Dave & Buster's Entertainment analyst has a price target of US$60.00 per share, while the most pessimistic values it at US$35.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 2.3% by the end of 2025. This indicates a significant reduction from annual growth of 20% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 9.7% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Dave & Buster's Entertainment is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that in mind, we wouldn't be too quick to come to a conclusion on Dave & Buster's Entertainment. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Dave & Buster's Entertainment going out to 2027, and you can see them free on our platform here..

It is also worth noting that we have found 1 warning sign for Dave & Buster's Entertainment that you need to take into consideration.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.