Insider trades can give investors a more complete view of activity within the world’s publicly-listed companies. No one has more information in relation to a company’s prospects than its executives and directors.
In this report, we are going to highlight some interesting insider buying at Dave & Buster’s Entertainment Inc (PLAY:US). Dave & Buster's is a hospitality company that operates high-volume venues across the US which combine entertainment and dining. Founded in 1982, the company aims to offer guests the opportunity to ‘Eat Drink Play Watch’ all in one location. It is listed on the NASDAQ Global Select Market and currently has a market capitalization of $2.35 billion.
Dave & Buster’s Entertainment Inc: Insider Buying
Our insider transaction data shows that on April 8, Chairman of the Board and Interim CEO Kevin Sheehan purchased 10,000 PLAY shares at a price of $40.58 per share. This trade cost the insider $405,800 and increased his holding to 163,796 shares.
This transaction is worth highlighting due to the fact that Mr. Sheehan has made well-timed purchases in the recent past. In December 2021, the insider picked up 15,000 shares at a price of $34.92 per share. Since then, the stock has risen as high as $50.
It’s worth noting that Mr. Sheehan has considerable experience in the hospitality industry. He has served as a director at Dave & Buster’s since 2011 and previously served as CEO of cruise operator Norwegian. He also has some private equity experience. Before joining Norwegian, he was a consultant to private equity firms including Cerberus Capital Management LP and Clayton Dubilier & Rice. This background means that he is likely to have a good understanding of the investment potential here.
Dave & Buster’s recent Q4 results showed that the group has made a good recovery from the pandemic.
For the quarter, revenue came in at $343.1 million, just 1.2% below the figure generated in Q4 2019. Meanwhile, adjusted EBITDA increased 12.7% from the fourth quarter of 2019 to $87.7 million, or 25.5% of revenue versus 22.4% of revenue in Q4 2019. Net income totaled $25.7 million, compared with net loss of $56.8 million in Q4 2020 and net income of $25.0 million in the fourth quarter of 2019.
During the quarter, the company generated approximately $85 million in operating cash flow. This allowed it to redeem $55 million of 7.625% senior secured notes at 103% of principal, saving approximately $4.2 million in annualized interest. It ended the quarter with $25.9 million in cash, and approximately $492.5 million of availability under its $500 million revolving credit facility.
Looking ahead, management was confident that the company can continue to grow. “This Company has significant upside potential and with our continued focus on innovation, growth and value creation, we are driving toward unlocking that value. We are optimistic about the future and look forward to sharing our ongoing progress with everyone,” commented Mr. Sheehan.
It noted that the business has strengthened through the first eight weeks of the first quarter, with comparable store sales increasing 5.4% compared with the same period in 2019.
In light of the recovery here, we see the insider buying as a bullish indicator.