Intrinsic value of Dave & Buster's Entertainment, Inc. - PLAY

Previous Close

$53.61

  Intrinsic Value

$94.73

stock screener

  Rating & Target

str. buy

+77%

Previous close

$53.61

 
Intrinsic value

$94.73

 
Up/down potential

+77%

 
Rating

str. buy

We calculate the intrinsic value of PLAY stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 2.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  12.90
  12.11
  11.40
  10.76
  10.18
  9.66
  9.20
  8.78
  8.40
  8.06
  7.75
  7.48
  7.23
  7.01
  6.81
  6.63
  6.46
  6.32
  6.19
  6.07
  5.96
  5.86
  5.78
  5.70
  5.63
  5.57
  5.51
  5.46
  5.41
  5.37
Revenue, $m
  1,287
  1,443
  1,607
  1,780
  1,962
  2,151
  2,349
  2,555
  2,770
  2,993
  3,225
  3,467
  3,717
  3,978
  4,249
  4,530
  4,823
  5,128
  5,445
  5,775
  6,119
  6,478
  6,853
  7,243
  7,651
  8,077
  8,522
  8,987
  9,474
  9,983
Variable operating expenses, $m
  1,085
  1,207
  1,337
  1,473
  1,615
  1,764
  1,920
  2,082
  2,251
  2,426
  2,536
  2,726
  2,923
  3,128
  3,341
  3,562
  3,792
  4,032
  4,281
  4,541
  4,812
  5,094
  5,388
  5,695
  6,016
  6,351
  6,701
  7,067
  7,449
  7,850
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  1,085
  1,207
  1,337
  1,473
  1,615
  1,764
  1,920
  2,082
  2,251
  2,426
  2,536
  2,726
  2,923
  3,128
  3,341
  3,562
  3,792
  4,032
  4,281
  4,541
  4,812
  5,094
  5,388
  5,695
  6,016
  6,351
  6,701
  7,067
  7,449
  7,850
Operating income, $m
  202
  236
  271
  308
  347
  387
  429
  473
  519
  567
  689
  741
  794
  850
  908
  968
  1,031
  1,096
  1,163
  1,234
  1,308
  1,384
  1,464
  1,548
  1,635
  1,726
  1,821
  1,920
  2,024
  2,133
EBITDA, $m
  371
  416
  463
  513
  566
  620
  677
  737
  799
  863
  930
  1,000
  1,072
  1,147
  1,225
  1,306
  1,391
  1,478
  1,570
  1,665
  1,764
  1,868
  1,976
  2,088
  2,206
  2,329
  2,457
  2,591
  2,732
  2,878
Interest expense (income), $m
  0
  20
  25
  31
  37
  43
  50
  57
  64
  72
  80
  88
  96
  105
  115
  124
  134
  144
  155
  166
  178
  190
  203
  216
  230
  244
  259
  275
  291
  308
  326
Earnings before tax, $m
  183
  211
  240
  271
  303
  337
  372
  409
  447
  487
  601
  644
  689
  735
  784
  834
  886
  941
  997
  1,056
  1,117
  1,181
  1,248
  1,318
  1,391
  1,467
  1,546
  1,629
  1,716
  1,807
Tax expense, $m
  49
  57
  65
  73
  82
  91
  101
  110
  121
  132
  162
  174
  186
  199
  212
  225
  239
  254
  269
  285
  302
  319
  337
  356
  376
  396
  417
  440
  463
  488
Net income, $m
  133
  154
  175
  198
  221
  246
  272
  299
  327
  356
  439
  470
  503
  537
  572
  609
  647
  687
  728
  771
  816
  862
  911
  962
  1,015
  1,071
  1,129
  1,189
  1,253
  1,319

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  1,352
  1,516
  1,688
  1,870
  2,061
  2,260
  2,468
  2,684
  2,910
  3,144
  3,388
  3,641
  3,905
  4,178
  4,463
  4,759
  5,066
  5,386
  5,719
  6,066
  6,428
  6,805
  7,198
  7,608
  8,037
  8,484
  8,952
  9,440
  9,951
  10,486
Adjusted assets (=assets-cash), $m
  1,352
  1,516
  1,688
  1,870
  2,061
  2,260
  2,468
  2,684
  2,910
  3,144
  3,388
  3,641
  3,905
  4,178
  4,463
  4,759
  5,066
  5,386
  5,719
  6,066
  6,428
  6,805
  7,198
  7,608
  8,037
  8,484
  8,952
  9,440
  9,951
  10,486
Revenue / Adjusted assets
  0.952
  0.952
  0.952
  0.952
  0.952
  0.952
  0.952
  0.952
  0.952
  0.952
  0.952
  0.952
  0.952
  0.952
  0.952
  0.952
  0.952
  0.952
  0.952
  0.952
  0.952
  0.952
  0.952
  0.952
  0.952
  0.952
  0.952
  0.952
  0.952
  0.952
Average production assets, $m
  951
  1,066
  1,188
  1,316
  1,450
  1,590
  1,736
  1,888
  2,047
  2,212
  2,384
  2,562
  2,747
  2,940
  3,140
  3,348
  3,564
  3,789
  4,024
  4,268
  4,522
  4,787
  5,064
  5,353
  5,654
  5,969
  6,298
  6,642
  7,001
  7,377
Working capital, $m
  -131
  -147
  -164
  -182
  -200
  -219
  -240
  -261
  -283
  -305
  -329
  -354
  -379
  -406
  -433
  -462
  -492
  -523
  -555
  -589
  -624
  -661
  -699
  -739
  -780
  -824
  -869
  -917
  -966
  -1,018
Total debt, $m
  467
  573
  685
  803
  926
  1,055
  1,190
  1,330
  1,476
  1,628
  1,786
  1,950
  2,121
  2,298
  2,483
  2,674
  2,874
  3,081
  3,297
  3,522
  3,756
  4,000
  4,255
  4,521
  4,799
  5,089
  5,392
  5,708
  6,039
  6,386
Total liabilities, $m
  876
  982
  1,094
  1,212
  1,335
  1,464
  1,599
  1,739
  1,885
  2,037
  2,195
  2,360
  2,530
  2,708
  2,892
  3,084
  3,283
  3,490
  3,706
  3,931
  4,165
  4,410
  4,664
  4,930
  5,208
  5,498
  5,801
  6,117
  6,449
  6,795
Total equity, $m
  476
  534
  594
  658
  725
  795
  869
  945
  1,024
  1,107
  1,193
  1,282
  1,374
  1,471
  1,571
  1,675
  1,783
  1,896
  2,013
  2,135
  2,263
  2,395
  2,534
  2,678
  2,829
  2,986
  3,151
  3,323
  3,503
  3,691
Total liabilities and equity, $m
  1,352
  1,516
  1,688
  1,870
  2,060
  2,259
  2,468
  2,684
  2,909
  3,144
  3,388
  3,642
  3,904
  4,179
  4,463
  4,759
  5,066
  5,386
  5,719
  6,066
  6,428
  6,805
  7,198
  7,608
  8,037
  8,484
  8,952
  9,440
  9,952
  10,486
Debt-to-equity ratio
  0.980
  1.070
  1.150
  1.220
  1.280
  1.330
  1.370
  1.410
  1.440
  1.470
  1.500
  1.520
  1.540
  1.560
  1.580
  1.600
  1.610
  1.630
  1.640
  1.650
  1.660
  1.670
  1.680
  1.690
  1.700
  1.700
  1.710
  1.720
  1.720
  1.730
Adjusted equity ratio
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  133
  154
  175
  198
  221
  246
  272
  299
  327
  356
  439
  470
  503
  537
  572
  609
  647
  687
  728
  771
  816
  862
  911
  962
  1,015
  1,071
  1,129
  1,189
  1,253
  1,319
Depreciation, amort., depletion, $m
  169
  180
  193
  205
  219
  233
  248
  263
  279
  296
  241
  259
  277
  297
  317
  338
  360
  383
  406
  431
  457
  484
  512
  541
  571
  603
  636
  671
  707
  745
Funds from operations, $m
  302
  334
  368
  403
  440
  479
  520
  562
  606
  652
  680
  729
  780
  834
  889
  947
  1,007
  1,069
  1,134
  1,202
  1,273
  1,346
  1,423
  1,503
  1,586
  1,674
  1,765
  1,860
  1,960
  2,064
Change in working capital, $m
  -15
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -32
  -34
  -35
  -37
  -38
  -40
  -42
  -43
  -45
  -47
  -50
  -52
Cash from operations, $m
  317
  350
  385
  421
  459
  499
  540
  583
  628
  675
  703
  754
  806
  860
  917
  976
  1,037
  1,100
  1,167
  1,236
  1,308
  1,383
  1,461
  1,543
  1,628
  1,717
  1,810
  1,908
  2,010
  2,116
Maintenance CAPEX, $m
  -85
  -96
  -108
  -120
  -133
  -146
  -161
  -175
  -191
  -207
  -223
  -241
  -259
  -277
  -297
  -317
  -338
  -360
  -383
  -406
  -431
  -457
  -484
  -512
  -541
  -571
  -603
  -636
  -671
  -707
New CAPEX, $m
  -109
  -115
  -122
  -128
  -134
  -140
  -146
  -152
  -159
  -165
  -172
  -178
  -185
  -193
  -200
  -208
  -216
  -225
  -234
  -244
  -254
  -265
  -277
  -289
  -301
  -315
  -329
  -344
  -360
  -376
Cash from investing activities, $m
  -194
  -211
  -230
  -248
  -267
  -286
  -307
  -327
  -350
  -372
  -395
  -419
  -444
  -470
  -497
  -525
  -554
  -585
  -617
  -650
  -685
  -722
  -761
  -801
  -842
  -886
  -932
  -980
  -1,031
  -1,083
Free cash flow, $m
  123
  139
  155
  173
  192
  212
  233
  255
  279
  303
  308
  335
  362
  390
  420
  450
  482
  515
  550
  585
  622
  661
  701
  742
  786
  831
  878
  928
  979
  1,033
Issuance/(repayment) of debt, $m
  101
  106
  112
  118
  123
  129
  135
  140
  146
  152
  158
  164
  171
  177
  184
  192
  199
  207
  216
  225
  234
  244
  255
  266
  278
  290
  303
  317
  331
  346
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  101
  106
  112
  118
  123
  129
  135
  140
  146
  152
  158
  164
  171
  177
  184
  192
  199
  207
  216
  225
  234
  244
  255
  266
  278
  290
  303
  317
  331
  346
Total cash flow (excl. dividends), $m
  224
  245
  267
  291
  315
  341
  368
  396
  425
  455
  466
  499
  533
  568
  604
  642
  682
  723
  765
  810
  856
  905
  956
  1,008
  1,063
  1,121
  1,181
  1,244
  1,310
  1,379
Retained Cash Flow (-), $m
  -54
  -58
  -61
  -64
  -67
  -70
  -73
  -76
  -79
  -83
  -86
  -89
  -93
  -96
  -100
  -104
  -108
  -113
  -117
  -122
  -127
  -133
  -138
  -144
  -151
  -157
  -165
  -172
  -180
  -188
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  170
  187
  206
  227
  248
  271
  295
  319
  345
  372
  381
  410
  440
  471
  504
  538
  573
  610
  648
  688
  729
  772
  817
  864
  913
  964
  1,017
  1,072
  1,130
  1,191
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  163
  171
  180
  187
  193
  197
  199
  200
  198
  195
  181
  175
  167
  158
  148
  137
  125
  112
  100
  87
  75
  64
  54
  44
  36
  28
  22
  17
  12
  9
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Dave & Buster’s Entertainment, Inc. owns and operates entertainment and dining venues for adults and families in North America. Its venues offer a menu of ‘Fun American New Gourmet’ entrées and appetizers, as well as a selection of non-alcoholic and alcoholic beverages; and an assortment of entertainment attractions centered on playing games and watching live sports, and other televised events. The company operates its venues under the Dave & Buster’s name. As of December 6, 2016, it owned and operated 88 stores in 33 states and Canada. Dave & Buster’s Entertainment, Inc. was founded in 1982 and is headquartered in Dallas, Texas.

FINANCIAL RATIOS  of  Dave & Buster's Entertainment, Inc. (PLAY)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

PLAY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PLAY stock intrinsic value calculation we used $1140 million for the last fiscal year's total revenue generated by Dave & Buster's Entertainment, Inc.. The default revenue input number comes from 0001 income statement of Dave & Buster's Entertainment, Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our PLAY stock valuation model: a) initial revenue growth rate of 12.9% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for PLAY is calculated based on our internal credit rating of Dave & Buster's Entertainment, Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Dave & Buster's Entertainment, Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of PLAY stock the variable cost ratio is equal to 85%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for PLAY stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Dave & Buster's Entertainment, Inc..

Corporate tax rate of 27% is the nominal tax rate for Dave & Buster's Entertainment, Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the PLAY stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for PLAY are equal to 73.9%.

Life of production assets of 9.9 years is the average useful life of capital assets used in Dave & Buster's Entertainment, Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for PLAY is equal to -10.2%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $421.646 million for Dave & Buster's Entertainment, Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 38.542 million for Dave & Buster's Entertainment, Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Dave & Buster's Entertainment, Inc. at the current share price and the inputted number of shares is $2.1 billion.

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