Food and games restaurant chain Dave & Buster's Entertainment had a rough go of it last quarter. But that came on the heels of massive profit and sales growth, and it's still a favorite of institutional investors such as mutual funds. On Tuesday, the stock Relative Strength (RS) Rating for Dave & Buster's stock moved up into a new percentile, as it got a lift from 64 to 75.
The jump, and other key ratings, indicate there is strong interest in the stock. The best stocks tend to have an RS Rating north of 80 in the early stages of their moves. See if Dave & Buster's can continue to rebound and clear that threshold.
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Dave & Buster's Stock Building Fresh Base
Dave & Buster's is building a cup with handle pattern with a 41.01 entry. See if it can break out in heavy trade. Tuesday afternoon the restaurant chain traded around 38.71, down about 2% for the day.
On Sept. 7, the company reported a 45% drop in second quarter earnings per share to 59 cents on a 24% rise in revenue to $468.4 million. Its Q2 results included a one-time charge of $3.32 million for refinancing.
However, the prior three quarters its EPS rose 121%, 144% and 238%. It saw similarly strong revenue growth during that period. Investors are betting that the Q2 results were an anomaly. Dave & Buster's stock has a B- Accumulation/Distribution Rating on an A+ to E scale with A+ best. The B- A/D Rating shows that investors are fairly heavy buyers of its stock.
Coppell, Texas-based Dave & Buster's says on its website that it plans to report third quarter earnings results on Dec. 6 after the market closes.
Other Ratings Mostly Strong
Among its other key ratings, Dave & Buster's stock has an 80 Composite Rating, putting it in the top 20% of all stocks for a group of fundamental and technical metrics. It has a 40 Earnings Per Share Rating mainly due to weak profit growth in the early part of the Covid pandemic when consumers stayed away from restaurants. However it also carries a bullish B SMR Rating (sales growth+profit margins+return on equity) on an A-to-E scale.
Among Dave & Buster's rivals, Canada-based Burger King and Tim Hortons' parent Restaurant Brands International and Wingstop are among the top-rated companies in the restaurants group.
As you try to find the best stocks to buy and watch, keep a close on eye on relative price strength.
This unique rating identifies technical performance by using a 1 (worst) to 99 (best) score that indicates how a stock's price action over the trailing 52 weeks compares to other publicly traded companies.
