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Dave & Buster's Entertainment and Foot Locker have been highlighted as Zacks Bull and Bear of the Day
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For Immediate Release
Chicago, IL – April 20, 2022 – Zacks Equity Research shares Dave & Buster’s Entertainment (PLAY - Free Report) as the Bull of the Day and Foot Locker (FL - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Netflix (NFLX - Free Report) and IBM Corp. (IBM - Free Report) .
Founded in 1982 and headquartered in Dallas, TX, Dave & Buster's Entertainment is a leading owner and operator of high-volume venues that combine dining and entertaining. The core concept of the company is "Eat Drink Play and Watch," all in one location, and it has two main operating segments: Food and Beverage (33.5% of total revenues in fiscal 2021) and Amusement and Other revenues (66.5%).
Q4 Earnings Recap
Shares of Dave & Buster's surged as much as 14.5% the day after the company released fiscal 2021 fourth-quarter results last month.
Revenue shot up 194% to $343.1 million, and full-year sales improved by 199% versus full-year 2020. While the company's top line still lags pre-pandemic levels in 2019, revenue has mostly recovered.
The same trends apply to earnings. PLAY generated $0.52 per share for Q4 compared to a loss of $1.19 per share in 2020 and a profit of $0.80 in Q4 2019.
But it was the outlook for same-store sales that drove the stock higher. The company said that same-store sales grew by 5.4% through the first eight weeks of 2022, suggesting Dave & Buster's may finally be back on a growth path.
Investors were unsurprisingly excited by this development, as well as the fact that Dave & Buster's was able to show strength during a period that was bogged down by the omicron coronavirus variant.
Can PLAY Surge Higher?
Year-to-date, shares of PLAY have gained about 27% compared to the S&P 500's loss of 6.4%, but earnings estimates have climbed higher, making the restaurant chain a Zacks Rank #1 (Strong Buy) right now.
For the current fiscal year, six analysts have revised their bottom-line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up from $2.70 per share to $3.30 per share. Earnings and sales are expected to increase 49.3% and 24.4%, respectively for 2022, with 2023 continuing the positive growth trend.
"[Dave & Buster's} has significant upside potential and with our continued focus on innovation, growth and value creation, we are driving toward unlocking that value. We are optimistic about the future and look forward to sharing our ongoing progress with everyone," said interim CEO Kevin Sheehan.
Wall Street is feeling bullish on Dave & Buster's too.
Jeffries analyst Andy Barish reiterated his buy recommendation on PLAY last week, with a $60 price target. He believes the company's recent $835 million acquisition of Main Event, which specializes in family entertainment venues, "will allow for more growth in strong [Dave & Buster's] markets such as the West Coast and East Coast given [the company's] domain knowledge and relatively limited exposure in those markets for Main Event," he told investors in a research note.
If you're an investor searching for a restaurant stock to add to your portfolio, make sure to keep PLAY on your shortlist.
Foot Locker is an athletic shoe and apparel retailer that operates throughout North America, Europe, Asia, Australia & New Zealand, and the Middle East. In the company's North America segment, there are six different banners--Foot Locker, Kids Foot Locker, Lady Foot Locker, Champs Sports, Footaction, and SIX:02, including each of their related e-commerce businesses, as well as its Eastbay business that includes internet, catalog, and team sales.
Q4 Earnings Recap
In late February, Foot Locker reported solid fourth quarter earnings results; however, the report failed to meet Wall Street's expectations, and as a result, shares plunged 30%.
Total revenue rose 6.9% year-over-year to $2.3 billion, but GAAP net income fell 16% to $103 million, or $1.02 per share, due to higher costs and restructuring changes. Additionally, comparable sales were up 0.8% even compared to strong results in the prior year.
Even though Foot Locker faced supply chain issues just like many of its peers, rising demand for premium footwear and apparel helped offset that pressure and kept gross profit margin steady at above 34% of sales.
Driving the sell-off,though, was Foot Locker's warning that Nike, its biggest supplier, will be dramatically decreasing the volume of products it sells through its partnerships. This means that Nike merchandise will represent about 55% of Foot Locker's overall sales by late 2022, down from previous levels of over 70%.
For 2022, Foot Locker expects sales to fall by as much as 6%, with comparable sales down by as much as 10%.
Bottom Line
FL is currently a Zacks Rank #5 (Strong Sell).
Eight analysts have cut their full year earnings outlook over the past 60 days, and the consensus estimate has fallen $1.76 to $4.48 per share. Earnings are expected to slide over 42% year-over-year, and it looks like FL's bottom-line will decline again for the next fiscal year.
Shares are down about 30% year-to-date compared to the S&P 500's loss of 6.4%, and FL current trades at a forward 12-month earnings multiple of 6.7X.
Nike's decision to curtail who is able to sell Nike-branded products will definitely impact Foot Locker, and will place intense pressure on the retailer's overall sales footprint in 2022. But Foot Locker is trying to cushion the blow, scooping up athletic companies like WSS and atmos to try and diversify its product lineup and lure customers to its stores and websites.
However, shares may continue to experience some ups and downs as inflation hits business and the retailer deals with a key part of its business model fading, so potential investors should proceed with caution.
Additional content:
Netflix -24% on Weak Q1; IBM Beats Estimates
Markets rallied off some early morning trepidation this Tuesday and raged ahead, making up for lost ground over the past few softer sessions. The Dow gained nearly 500 points on the day, +1.45%, while the Nasdaq put up +287 points, +2.15%. Splitting the difference, the S&P 500 grew by +1.61% on the day and the small-cap Russell 2000 rode up +2.04%. We're now positive for the week, which would be a welcome change.
After beginning April in the green for the first couple sessions, we're finally back to positive territory month to date. We still have a ways to go to get back to early January highs for the year (in the Dow and S&P's case, those represented all-time highs), but perhaps a better-than-expected Q1 earnings season could hasten this positive shift.
If so, don't look to Netflix for assistance this quarter. Shares dumped -10% immediately upon its Q1 earnings report, which missed on the top line but beat on the bottom; however, it has now fallen -24% in the after-market. This compounds the -42% stock price year to date, indicating the streaming entertainment leader is now trading at an uncommonly low valuation.
Earnings of $3.53 per share easily surpassed the $2.92 expected in the Zacks consensus, although still below the $3.75 per share reported in the year-ago quarter. Revenues were light of expectations, however: $7.87 billion was moderately off the $7.94 billion expected, and still represents a year-over-year gain.
Netflix's biggest problem was in net subscription adds, which came in negative overall for the first time ever: -200K, versus expectations of a gain of 2.5-2.75 million. Pulling its services out of Russia pushed the net adds into the negative; including anticipated subscriber adds in the country, Netflix assesses its subscriber add headline would have reached +500K. Still, this is roughly two million fewer than analysts had presumed.
In 13 of the past 15 quarters, Netflix shares have sold off on earnings releases. That's not to say the stock has suffered overall through that time; in fact, as one of the great benefactors of the global pandemic, Netflix shares are still up +130% over the past five years. But those all-time highs the company registered in early November last year feel like a long time ago now.
IBM Corp. also put out fresh Q1 earnings figures, beating expectations on both top and bottom lines: $1.40 per share surpassed the $1.36 expected (though still below the $1.77 per share a year ago) on $14.20 billion in sales that easily took out the Zacks consensus $13.81 billion. Software growth was +12% and Consulting gained +13%, and progress in the company's Cloud and Infrastructure business positions it well for the following quarters in 2022, especially the second half of the year. Shares are up +3% in the after market on the news.
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Dave & Buster's Entertainment and Foot Locker have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – April 20, 2022 – Zacks Equity Research shares Dave & Buster’s Entertainment (PLAY - Free Report) as the Bull of the Day and Foot Locker (FL - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Netflix (NFLX - Free Report) and IBM Corp. (IBM - Free Report) .
Here is a synopsis of all four stocks:
Bull of the Day:
Founded in 1982 and headquartered in Dallas, TX, Dave & Buster's Entertainment is a leading owner and operator of high-volume venues that combine dining and entertaining. The core concept of the company is "Eat Drink Play and Watch," all in one location, and it has two main operating segments: Food and Beverage (33.5% of total revenues in fiscal 2021) and Amusement and Other revenues (66.5%).
Q4 Earnings Recap
Shares of Dave & Buster's surged as much as 14.5% the day after the company released fiscal 2021 fourth-quarter results last month.
Revenue shot up 194% to $343.1 million, and full-year sales improved by 199% versus full-year 2020. While the company's top line still lags pre-pandemic levels in 2019, revenue has mostly recovered.
The same trends apply to earnings. PLAY generated $0.52 per share for Q4 compared to a loss of $1.19 per share in 2020 and a profit of $0.80 in Q4 2019.
But it was the outlook for same-store sales that drove the stock higher. The company said that same-store sales grew by 5.4% through the first eight weeks of 2022, suggesting Dave & Buster's may finally be back on a growth path.
Investors were unsurprisingly excited by this development, as well as the fact that Dave & Buster's was able to show strength during a period that was bogged down by the omicron coronavirus variant.
Can PLAY Surge Higher?
Year-to-date, shares of PLAY have gained about 27% compared to the S&P 500's loss of 6.4%, but earnings estimates have climbed higher, making the restaurant chain a Zacks Rank #1 (Strong Buy) right now.
For the current fiscal year, six analysts have revised their bottom-line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up from $2.70 per share to $3.30 per share. Earnings and sales are expected to increase 49.3% and 24.4%, respectively for 2022, with 2023 continuing the positive growth trend.
"[Dave & Buster's} has significant upside potential and with our continued focus on innovation, growth and value creation, we are driving toward unlocking that value. We are optimistic about the future and look forward to sharing our ongoing progress with everyone," said interim CEO Kevin Sheehan.
Wall Street is feeling bullish on Dave & Buster's too.
Jeffries analyst Andy Barish reiterated his buy recommendation on PLAY last week, with a $60 price target. He believes the company's recent $835 million acquisition of Main Event, which specializes in family entertainment venues, "will allow for more growth in strong [Dave & Buster's] markets such as the West Coast and East Coast given [the company's] domain knowledge and relatively limited exposure in those markets for Main Event," he told investors in a research note.
If you're an investor searching for a restaurant stock to add to your portfolio, make sure to keep PLAY on your shortlist.
Bear of the Day:
Foot Locker is an athletic shoe and apparel retailer that operates throughout North America, Europe, Asia, Australia & New Zealand, and the Middle East. In the company's North America segment, there are six different banners--Foot Locker, Kids Foot Locker, Lady Foot Locker, Champs Sports, Footaction, and SIX:02, including each of their related e-commerce businesses, as well as its Eastbay business that includes internet, catalog, and team sales.
Q4 Earnings Recap
In late February, Foot Locker reported solid fourth quarter earnings results; however, the report failed to meet Wall Street's expectations, and as a result, shares plunged 30%.
Total revenue rose 6.9% year-over-year to $2.3 billion, but GAAP net income fell 16% to $103 million, or $1.02 per share, due to higher costs and restructuring changes. Additionally, comparable sales were up 0.8% even compared to strong results in the prior year.
Even though Foot Locker faced supply chain issues just like many of its peers, rising demand for premium footwear and apparel helped offset that pressure and kept gross profit margin steady at above 34% of sales.
Driving the sell-off,though, was Foot Locker's warning that Nike, its biggest supplier, will be dramatically decreasing the volume of products it sells through its partnerships. This means that Nike merchandise will represent about 55% of Foot Locker's overall sales by late 2022, down from previous levels of over 70%.
For 2022, Foot Locker expects sales to fall by as much as 6%, with comparable sales down by as much as 10%.
Bottom Line
FL is currently a Zacks Rank #5 (Strong Sell).
Eight analysts have cut their full year earnings outlook over the past 60 days, and the consensus estimate has fallen $1.76 to $4.48 per share. Earnings are expected to slide over 42% year-over-year, and it looks like FL's bottom-line will decline again for the next fiscal year.
Shares are down about 30% year-to-date compared to the S&P 500's loss of 6.4%, and FL current trades at a forward 12-month earnings multiple of 6.7X.
Nike's decision to curtail who is able to sell Nike-branded products will definitely impact Foot Locker, and will place intense pressure on the retailer's overall sales footprint in 2022. But Foot Locker is trying to cushion the blow, scooping up athletic companies like WSS and atmos to try and diversify its product lineup and lure customers to its stores and websites.
However, shares may continue to experience some ups and downs as inflation hits business and the retailer deals with a key part of its business model fading, so potential investors should proceed with caution.
Additional content:
Netflix -24% on Weak Q1; IBM Beats Estimates
Markets rallied off some early morning trepidation this Tuesday and raged ahead, making up for lost ground over the past few softer sessions. The Dow gained nearly 500 points on the day, +1.45%, while the Nasdaq put up +287 points, +2.15%. Splitting the difference, the S&P 500 grew by +1.61% on the day and the small-cap Russell 2000 rode up +2.04%. We're now positive for the week, which would be a welcome change.
After beginning April in the green for the first couple sessions, we're finally back to positive territory month to date. We still have a ways to go to get back to early January highs for the year (in the Dow and S&P's case, those represented all-time highs), but perhaps a better-than-expected Q1 earnings season could hasten this positive shift.
If so, don't look to Netflix for assistance this quarter. Shares dumped -10% immediately upon its Q1 earnings report, which missed on the top line but beat on the bottom; however, it has now fallen -24% in the after-market. This compounds the -42% stock price year to date, indicating the streaming entertainment leader is now trading at an uncommonly low valuation.
Earnings of $3.53 per share easily surpassed the $2.92 expected in the Zacks consensus, although still below the $3.75 per share reported in the year-ago quarter. Revenues were light of expectations, however: $7.87 billion was moderately off the $7.94 billion expected, and still represents a year-over-year gain.
Netflix's biggest problem was in net subscription adds, which came in negative overall for the first time ever: -200K, versus expectations of a gain of 2.5-2.75 million. Pulling its services out of Russia pushed the net adds into the negative; including anticipated subscriber adds in the country, Netflix assesses its subscriber add headline would have reached +500K. Still, this is roughly two million fewer than analysts had presumed.
In 13 of the past 15 quarters, Netflix shares have sold off on earnings releases. That's not to say the stock has suffered overall through that time; in fact, as one of the great benefactors of the global pandemic, Netflix shares are still up +130% over the past five years. But those all-time highs the company registered in early November last year feel like a long time ago now.
IBM Corp. also put out fresh Q1 earnings figures, beating expectations on both top and bottom lines: $1.40 per share surpassed the $1.36 expected (though still below the $1.77 per share a year ago) on $14.20 billion in sales that easily took out the Zacks consensus $13.81 billion. Software growth was +12% and Consulting gained +13%, and progress in the company's Cloud and Infrastructure business positions it well for the following quarters in 2022, especially the second half of the year. Shares are up +3% in the after market on the news.
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.