Lucky Strike has gotten torched over the last six months - since September 2025, its stock price has dropped 21.8% to $8.16 per share. This was partly driven by its softer quarterly results and may have investors wondering how to approach the situation.
Is now the time to buy Lucky Strike, or should you be careful about including it in your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free.
Why Do We Think Lucky Strike Will Underperform?
Even with the cheaper entry price, we're cautious about Lucky Strike. Here are three reasons we avoid LUCK and a stock we'd rather own.
1. Shrinking Same-Store Sales Indicate Waning Demand
Investors interested in Consumer Discretionary - Leisure Facilities companies should track same-store sales in addition to reported revenue. This metric measures the change in sales at brick-and-mortar locations that have existed for at least a year, giving visibility into Lucky Strike’s underlying demand characteristics.
Over the last two years, Lucky Strike’s same-store sales averaged 1.1% year-on-year declines. This performance was underwhelming and implies there may be increasing competition or market saturation. It also suggests Lucky Strike might have to close some locations or change its strategy and pricing, which can disrupt operations. 
2. New Investments Fail to Bear Fruit as ROIC Declines
ROIC, or return on invested capital, is a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).
We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Unfortunately, Lucky Strike’s ROIC has decreased over the last few years. Paired with its already low returns, these declines suggest its profitable growth opportunities are few and far between.
3. High Debt Levels Increase Risk
Debt is a tool that can boost company returns but presents risks if used irresponsibly. As long-term investors, we aim to avoid companies taking excessive advantage of this instrument because it could lead to insolvency.
Lucky Strike’s $2.76 billion of debt exceeds the $95.91 million of cash on its balance sheet. Furthermore, its 7× net-debt-to-EBITDA ratio (based on its EBITDA of $356.1 million over the last 12 months) shows the company is overleveraged.
At this level of debt, incremental borrowing becomes increasingly expensive and credit agencies could downgrade the company’s rating if profitability falls. Lucky Strike could also be backed into a corner if the market turns unexpectedly – a situation we seek to avoid as investors in high-quality companies.
We hope Lucky Strike can improve its balance sheet and remain cautious until it increases its profitability or pays down its debt.
Final Judgment
We see the value of companies helping consumers, but in the case of Lucky Strike, we’re out. After the recent drawdown, the stock trades at 39.5× forward P/E (or $8.16 per share). This valuation tells us it’s a bit of a market darling with a lot of good news priced in - we think other companies feature superior fundamentals at the moment. Let us point you toward the most entrenched endpoint security platform on the market.
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