It has been about a month since the last earnings report for Dave & Buster's Entertainment, Inc. PLAY. Shares have lost about 15.4% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Dave & Buster's Tops Q2 Earnings & Revenue Estimates
Dave & Buster's posted better-than-expected results in second-quarter fiscal 2017 wherein both the bottom and top line beat the Zacks Consensus Estimate.
However, a decelerating comps growth rate is a cause of concern.
Earnings & Revenues
Dave & Buster's earnings of 71 cents per share in the fiscal second quarter beat the Zacks Consensus Estimate of 55 cents by 29.1%. Also, the bottom line jumped 42% from the year-ago figure of 50 cents on higher revenues. Notably, results in the reported quarter included certain non-recurring items.
The company reported revenues of $280.8 million in the quarter, just above the Zacks Consensus Estimate of $280.5 million. Meanwhile, the top line improved 14.9% year over year primarily owing to consistent unit expansion.
Turning to category sales, Food and Beverage revenues rose 10.2% year over year to $118.7 million in the reported quarter. Also, Amusement and Other revenues increased 18.6% to $162.1 million.
Behind the Headline Numbers
Comps increased 1.1% year over year in the fiscal second quarter, driven by a 1.1% rise in walk-in sales and 1.6% improvement in special events sales. Though the figure was slightly better than 1% growth recorded in the prior-year quarter, it was below a 2.2% increase in the last quarter.
Moreover, comps came in below the company’s expectation, given the continued challenging environment for casual dining.
Earnings before interest, taxes, and amortization (EBITDA) rose 11.5% to $64 million. Meanwhile, EBITDA margins decreased 70 basis points to 22.8% from 23.5% in the year-ago quarter.
Fiscal 2017 Outlook
Dave & Buster's continues to expect fiscal 2017 revenues in the range of $1.160 billion to $1.170 billion.
The company now projects comps to increase in the band of 1% to 2% on a comparable 52-week basis compared with prior expectation of an increase in the range of 2% to 3%.
EBITDA is now anticipated to be between $270 million to $276 million, down from $276 million to $282 million, projected earlier.
In fiscal 2017, the company expects to open 14 new stores (earlier 12 openings were anticipated).