Dave & Buster's Entertainment, Inc. (NASDAQ:PLAY), is not the largest company out there, but it saw a significant share price rise of 33% in the past couple of months on the NASDAQGS. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s examine Dave & Buster's Entertainment’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

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What's The Opportunity In Dave & Buster's Entertainment?

Good news, investors! Dave & Buster's Entertainment is still a bargain right now according to our price multiple model, which compares the company's price-to-earnings ratio to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. we find that Dave & Buster's Entertainment’s ratio of 12.63x is below its peer average of 22.45x, which indicates the stock is trading at a lower price compared to the Hospitality industry. However, given that Dave & Buster's Entertainment’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

Check out our latest analysis for Dave & Buster's Entertainment

What kind of growth will Dave & Buster's Entertainment generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 57% over the next couple of years, the future seems bright for Dave & Buster's Entertainment. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? Since PLAY is currently trading below the industry PE ratio, it may be a great time to increase your holdings in the stock. With a positive profit outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current price multiple.