QS Research · Michael Burry's Scion Capital analyst template · 2006
Dave & Buster's Entertainment, Inc. (PLAY)
As of 2026-11-09 · 11/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case 0% · downside -100% · upside +208%
At today's 5.4x EV/EBITDA (N27), TTM EBITDA of $331.8M (N14) gives an EV of about $1.792B; after $1.52B net debt (N23), equity is about $272M, or $7.80 on 34.83M shares (N5), essentially the $7.81 price (N1). The equity is a levered stub: at the same 5.4x, a 15.2% fall in EBITDA to $281.5M wipes out common equity, so the downside is -100%, while a recovery to FY2025 Adjusted EBITDA of $436.6M (S103) would be about $24.05/share, +208%. The market is not missing the leverage or negative TTM free cash flow of -$16.0M (N18); it is pricing them, while possibly underpaying for the option value if comps improve (S101) and the >$100M fiscal 2026 free-cash-flow target (S102) is delivered. I would watch, not long because the downside is worse than -25%, and not short because the upside is above +25%.
Key numbers
- Share price: $7.81
- Market cap: $272.0M
- Latest financial period: TTM to Aug 4, 2026
- Revenue (TTM): $2.08B
- EV / EBITDA (TTM): 5.4x
- Price / book: 3.09x
The 15 boxes
- ✓ 1. Long-form business notes
Dave & Buster's earns most of its money from games, not food: entertainment was approximately 62.9% of total revenue in fiscal 2025 at a 91.9% gross margin, sold through 243 owned venues across two brands (179 Dave & Buster's, 64 Main Event) plus four international franchises as of February 3, 2026. The asset base has doubled since the oldest report here — 140 single-brand Dave & Buster's stores at January 31, 2021 versus 243 dual-brand venues — but the newest XBRL year shows the earnings engine has stalled: revenue $2.10B and operating income $86.1M in fiscal 2025 (ended Feb 3, 2026) versus revenue $2.21B and operating income $306.6M in the year ended Feb 4, 2024, with fiscal 2025 landing at a $48.7M net loss. Capital intensity is the pressure point: capex of $391.4M in fiscal 2025 exceeded operating cash flow of $290.8M, even as the targeted one-year store cash-on-cash return was cut from approximately 35% in the fiscal 2020 10-K to at least 30% in the fiscal 2025 10-K.
- ○ 2. Competitive advantage
The 10-K claims brand ownership and bulk game-buying discounts, but nothing in the numbers shows a durable advantage: operating income fell from $306.6M in the fiscal year ended 2024-02-04 to $86.1M in the year ended 2026-02-03 while revenue barely moved ($2.21B to $2.10B), and the fiscal year ended 2026-02-03 closed with a $48.7M net loss and a $67.9M pre-tax loss. The company describes the out-of-home entertainment market as "highly competitive," with larger, better-funded operators, home gaming and online sports betting as substitutes, and it says its own leverage places it at "a competitive disadvantage compared to our competitors who may be less highly leveraged." Capital intensity is the other tell: capex of $391.4M against $279.4M of D&A and $290.8M of operating cash flow in the fiscal year ended 2026-02-03.
- ✓ 3. 10-Q takeaways
Second quarter 2026 (ended August 4, 2026) revenue fell 2.4% to $544.1 million, comparable store sales fell 2.9%, and every store-level cost line rose as a percent of revenue, so Adjusted EBITDA dropped to $98.9 million (18.2% of revenue) from $129.8 million (23.3%) and operating income fell to $19.4 million from $53.0 million. GAAP net loss was $12.5 million (-$0.36 per diluted share) versus $11.4 million of prior-year net income, and even the company's adjusted net loss was $9.5 million. Six-month 2026 Adjusted EBITDA was $222.0 million versus $265.8 million, but Adjusted free cash flow turned positive at $19.5 million versus negative $36.5 million, and the quarter ended with $492.1 million of available liquidity. Neither the 10-Q nor the same-quarter earnings release gives numeric revenue or EBITDA guidance; the forward picture is limited to remodel and franchise opening counts plus management's statement that comps improved in July and into Q3 to date.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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