We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Bear of the Day: Dave & Busters Entertainment (PLAY)
Read MoreHide Full Article
Dave & Buster’s Entertainment (PLAY - Free Report) is a Zacks Rank #5 (Strong Sell) that owns and operates entertainment and dining venues for adults and families in North America. Its venues offer dining and an assortment of entertainment attractions centered on playing games and watching live sports.
The stock was trading at four-month highs before an earnings report last week. Unfortunately for investors, the quarter disappointed and the stock fell over 10%.
Buying the dip did work earlier in the year, but poor earnings and falling estimates should be a signal to avoid the stock for now.
About the Company
PLAY is headquartered in Coppell, TX. The company was founded in 1982 and employs over 13,000 people.
Dave & Busters operates under a core concept called “Eat Drink Play and Watch”. The company wants families to come for food and drinks, bring their kids to play games, while the adults watch the game.
The company operates under two segments, Food and Beverage (33.5% of total revenues in fiscal 2021) and Amusement and Other revenues (66.5%).
PLAY is valued at $2 billion and has a Forward PE of 14. The company holds a Zacks Style Scores of “B” in Value and “A” in Growth. The stock pays no dividend.
Q2 Earnings
The company reported EPS on September 7th, missing expectations by 39%. EPS came in at $0.59 v the $1.01 expected. Revenues beat, coming it at $468M v the $432M expected. Same Store Sales were up 9.6% v 2019, which means the company is above pre-pandemic levels.
While there are positives like having customers back and record-breaking revenues, the bottom line was hampered by wage and commodity inflation. This is eating in to profits and until they mitigate the issue, investors will shy away from the stock.
Estimates
Because of the poor performance in Q2, analysts are lowering estimates.
For the current quarter, estimates have dropped from $0.23 to $0.08 over the last 7 days, or 65%. This is a fairly large drop, which shows us near term the stock may have trouble lifting.
Things are expected to improve, but we still see a drop next quarter. Estimates over the last 7 days for the next quarter have fallen from $0.79 to $0.73, or 7.5%
Technical Take
Before earnings, the stock was looking healthy for the first time since April. It had bounced almost 50% off the July lows and was trading under the $45 level.
When earnings hit, the stock erased all the August gains and fell below the 200-day MA at $39 and to the 50-day moving average. This 50-day area held up and the bulls and bears seem to be fighting at the 200-day. A move below that recent low and we could see further downside.
In Summary
Dave & Busters is a place to have a good time, but investors in the stock are not having fun at all. The recent quarter is making bulls nervous and the stock could break some important technical levels soon.
For those interested in the niche restaurant space, a better option in the sector might be Cracker Barrel (CBRL - Free Report) . The stock is a Zacks Rank #2 (Buy) that has beaten on EPS two quarters in a row and is down only slightly on the year.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Bear of the Day: Dave & Busters Entertainment (PLAY)
Dave & Buster’s Entertainment (PLAY - Free Report) is a Zacks Rank #5 (Strong Sell) that owns and operates entertainment and dining venues for adults and families in North America. Its venues offer dining and an assortment of entertainment attractions centered on playing games and watching live sports.
The stock was trading at four-month highs before an earnings report last week. Unfortunately for investors, the quarter disappointed and the stock fell over 10%.
Buying the dip did work earlier in the year, but poor earnings and falling estimates should be a signal to avoid the stock for now.
About the Company
PLAY is headquartered in Coppell, TX. The company was founded in 1982 and employs over 13,000 people.
Dave & Busters operates under a core concept called “Eat Drink Play and Watch”. The company wants families to come for food and drinks, bring their kids to play games, while the adults watch the game.
The company operates under two segments, Food and Beverage (33.5% of total revenues in fiscal 2021) and Amusement and Other revenues (66.5%).
PLAY is valued at $2 billion and has a Forward PE of 14. The company holds a Zacks Style Scores of “B” in Value and “A” in Growth. The stock pays no dividend.
Q2 Earnings
The company reported EPS on September 7th, missing expectations by 39%. EPS came in at $0.59 v the $1.01 expected. Revenues beat, coming it at $468M v the $432M expected. Same Store Sales were up 9.6% v 2019, which means the company is above pre-pandemic levels.
While there are positives like having customers back and record-breaking revenues, the bottom line was hampered by wage and commodity inflation. This is eating in to profits and until they mitigate the issue, investors will shy away from the stock.
Estimates
Because of the poor performance in Q2, analysts are lowering estimates.
For the current quarter, estimates have dropped from $0.23 to $0.08 over the last 7 days, or 65%. This is a fairly large drop, which shows us near term the stock may have trouble lifting.
Things are expected to improve, but we still see a drop next quarter. Estimates over the last 7 days for the next quarter have fallen from $0.79 to $0.73, or 7.5%
Technical Take
Before earnings, the stock was looking healthy for the first time since April. It had bounced almost 50% off the July lows and was trading under the $45 level.
When earnings hit, the stock erased all the August gains and fell below the 200-day MA at $39 and to the 50-day moving average. This 50-day area held up and the bulls and bears seem to be fighting at the 200-day. A move below that recent low and we could see further downside.
In Summary
Dave & Busters is a place to have a good time, but investors in the stock are not having fun at all. The recent quarter is making bulls nervous and the stock could break some important technical levels soon.
For those interested in the niche restaurant space, a better option in the sector might be Cracker Barrel (CBRL - Free Report) . The stock is a Zacks Rank #2 (Buy) that has beaten on EPS two quarters in a row and is down only slightly on the year.