Investment Thesis
Dave & Buster's faces severe financial distress with net income collapsing 183.5% YoY, stagnant revenue (-1.4%), and an extremely overleveraged balance sheet (15.37x debt-to-equity ratio). With operating leverage consuming most OCF, minimal liquidity (0.29x current ratio), and interest coverage barely above 1.0x, the company is vulnerable to covenant breaches and refinancing risk.
Strengths
- Operating cash flow of $113.8M remains positive, providing near-term debt service capability
- Operating margin of 8.4% demonstrates the core business generates acceptable unit economics before financing burden
- Established market position in entertainment/dining sector with existing customer base
Risks
- Net income declined 183.5% YoY with net margin compressed to 1.0%, indicating severe operational or cost structure issues
- Extreme overleveraging with $1.5B debt against only $99.6M equity (15.37x D/E ratio) and interest coverage of 1.4x creates imminent solvency risk
- Critical liquidity crisis: current ratio of 0.29x with only $19.6M cash; unable to meet short-term obligations without operational cash generation
- Revenue contraction of 1.4% YoY combined with deteriorating profitability suggests loss of market share and demand challenges
- Capital intensity ($105.3M capex) consumes nearly all free cash flow, eliminating financial flexibility and refinancing capacity
- High insider activity (36 Form 4 filings in 90 days) may indicate distress-related transactions
Key Metrics to Watch
- Debt covenant compliance and refinancing capacity (critical with 1.4x interest coverage)
- Quarterly same-store sales and total revenue trends (must stabilize negative YoY growth)
- Free cash flow to debt service ratio and cash burn rate (sustainability at current leverage)
- Liquidity position and cash reserves (0.29x current ratio is unsustainable)
Financial Metrics
Revenue
559.2M
Net Income
5.7M
EPS (Diluted)
$0.16
Free Cash Flow
8.5M
Total Assets
4.1B
Cash
19.6M
Profitability Ratios
Gross Margin
N/A
Operating Margin
8.4%
Net Margin
1.0%
ROE
5.7%
ROA
0.1%
FCF Margin
1.5%
Balance Sheet & Liquidity
Current Ratio
0.29x
Quick Ratio
0.20x
Debt/Equity
15.37x
Debt/Assets
0.0%
Interest Coverage
1.42x
Long-term Debt
1.5B
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: 2026-06-16T07:21:05.440186 |
Data as of: 2026-05-05 |
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