Dave & Buster's Entertainment (NASDAQ:PLAY) stock falls 13% in past week as one-year earnings and shareholder returns continue downward trend

The nature of investing is that you win some, and you lose some. Anyone who held Dave & Buster's Entertainment, Inc. (NASDAQ:PLAY) over the last year knows what a loser feels like. In that relatively short period, the share price has plunged 66%. To make matters worse, the returns over three years have also been really disappointing (the share price is 40% lower than three years ago). Furthermore, it's down 45% in about a quarter. That's not much fun for holders.

If the past week is anything to go by, investor sentiment for Dave & Buster's Entertainment isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

Check out our latest analysis for Dave & Buster's Entertainment

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Unfortunately Dave & Buster's Entertainment reported an EPS drop of 25% for the last year. The share price decline of 66% is actually more than the EPS drop. Unsurprisingly, given the lack of EPS growth, the market seems to be more cautious about the stock. The less favorable sentiment is reflected in its current P/E ratio of 9.45.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

It's good to see that there was some significant insider buying in the last three months. That's a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. It might be well worthwhile taking a look at our free report on Dave & Buster's Entertainment's earnings, revenue and cash flow.

A Different Perspective

Investors in Dave & Buster's Entertainment had a tough year, with a total loss of 66%, against a market gain of about 17%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 2% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we've identified 4 warning signs for Dave & Buster's Entertainment (1 is significant) that you should be aware of.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: most of them are flying under the radar).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.

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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.