Investment Thesis
Dave & Buster's faces severe financial distress with a collapsing capital structure: negative net income of -$48.7M, negative free cash flow of -$100.6M despite $290.8M operating cash flow, and an unsustainable debt-to-equity ratio of 17.02x with only $91.2M equity backing $4.1B in assets. Declining revenues (-1.4% YoY), deteriorating liquidity (0.29x current ratio), and weak interest coverage (2.6x) indicate the company cannot service its $1.6B debt burden while remaining unprofitable.
Strengths
- Maintains $2.1B revenue base with established brand recognition in experiential retail
- Generates positive operating cash flow of $290.8M from ongoing operations
- Operating income of $86.1M (4.1% margin) shows potential profitability at operational level
Risks
- Extreme overleveraging with 17.02x debt-to-equity ratio and equity base of only $91.2M—equity cushion inadequate for $4.1B asset base
- Negative free cash flow of -$100.6M combined with net loss of -$48.7M indicates unsustainable cash burn despite positive operations
- Critical liquidity crisis with current ratio of 0.29x and only $16.6M cash against $1.6B long-term debt—refinancing risk is acute
- Revenue decline of -1.4% YoY signals weakening demand in core business model
- Weak debt service capacity with interest coverage of only 2.6x leaves minimal margin for operational deterioration
Key Metrics to Watch
- Free cash flow trajectory and path to positive FCF generation
- Debt refinancing terms and access to capital markets
- Revenue stabilization and store-level unit economics
- Equity cushion and covenant compliance ratios
- Operating cash flow sustainability and capex requirements
Financial Metrics
Revenue
2.1B
Net Income
-48.7M
EPS (Diluted)
$-1.40
Free Cash Flow
-100.6M
Total Assets
4.1B
Cash
16.6M
Profitability Ratios
Gross Margin
N/A
Operating Margin
4.1%
Net Margin
-2.3%
ROE
-53.4%
ROA
-1.2%
FCF Margin
-4.8%
Balance Sheet & Liquidity
Current Ratio
0.29x
Quick Ratio
0.19x
Debt/Equity
17.02x
Debt/Assets
0.0%
Interest Coverage
2.60x
Long-term Debt
1.6B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-04-14T08:36:22.026731 |
Data as of: 2026-02-03 |
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