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Why Is Dave & Buster's (PLAY) Down 12.6% Since Last Earnings Report?
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It has been about a month since the last earnings report for Dave & Buster's (PLAY - Free Report) . Shares have lost about 12.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Dave & Buster's 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 drivers.
Dave & Buster's Q1 Earnings Miss Estimates
Dave & Buster's reported tepid first-quarter fiscal 2024 results, with both earnings and revenues missing their respective Zacks Consensus Estimate. Both metrics declined on a year-over-year basis.
The company reported tougher year-over-year comparisons in January and February, exacerbated by challenging weather conditions. Sales during this period remained uneven, owing to economic difficulties in the lower-income demographics. The condensed and shorter spring break period they have further affected results, limiting the usual extended period for increased activities.
Despite observing some improvements in traffic, PLAY noted a negative single-digit trend in comparable sales. The company remains cautious, given the challenging macroeconomic environment.
Earnings & Revenues in Detail
During the fiscal fourth quarter, the company reported adjusted earnings per share (EPS) of $1.12, which missed the Zacks Consensus Estimate of $1.56. In the year-ago quarter, it reported an adjusted EPS of $1.52.
Quarterly revenues of $588.1 million missed the consensus mark of $611 million. The top line fell 1.5% from $597.3 million reported in the prior-year quarter.
Food and Beverage revenues (34.4% of total revenues in the reported quarter) declined 0.9% year over year to $202.4 million. Entertainment revenues (65.6%) fell 1.9% year over year to $385.7 million.
Comps Details
During the quarter under discussion, comparable store sales (including Main Event branded stores) declined 5.6% year over year.
Operating Highlights
During the quarter under discussion, operating income amounted to $85.5 million compared with $121.4 million in the prior-year quarter. The operating margin was 14.5% compared with 20.2% in the year-ago quarter.
Adjusted EBITDA came in at $159.1 million compared with $182.1 million in the year-earlier quarter. The downside was primarily driven by expenses related to labor and marketing for the rollout of a new menu and service model, the implementation of several new technology systems and an unsuccessful test of an incremental marketing campaign.
Balance Sheet
As of May 5, 2024, cash and cash equivalents were $32.1 million compared with $37.3 million as of Feb 4, 2024.
Year to date (as of May 5, 2024), the company repurchased 1 million shares for an aggregate cost of $50 million. As of May 5, the company had $150 million available for the buyback program.
At the fiscal first-quarter end, net long-term debt totaled approximately $1.29 billion compared with $1.28 billion in the prior quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -12.03% due to these changes.
VGM Scores
At this time, Dave & Buster's has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Dave & Buster's has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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Why Is Dave & Buster's (PLAY) Down 12.6% Since Last Earnings Report?
It has been about a month since the last earnings report for Dave & Buster's (PLAY - Free Report) . Shares have lost about 12.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Dave & Buster's 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 drivers.
Dave & Buster's Q1 Earnings Miss Estimates
Dave & Buster's reported tepid first-quarter fiscal 2024 results, with both earnings and revenues missing their respective Zacks Consensus Estimate. Both metrics declined on a year-over-year basis.
The company reported tougher year-over-year comparisons in January and February, exacerbated by challenging weather conditions. Sales during this period remained uneven, owing to economic difficulties in the lower-income demographics. The condensed and shorter spring break period they have further affected results, limiting the usual extended period for increased activities.
Despite observing some improvements in traffic, PLAY noted a negative single-digit trend in comparable sales. The company remains cautious, given the challenging macroeconomic environment.
Earnings & Revenues in Detail
During the fiscal fourth quarter, the company reported adjusted earnings per share (EPS) of $1.12, which missed the Zacks Consensus Estimate of $1.56. In the year-ago quarter, it reported an adjusted EPS of $1.52.
Quarterly revenues of $588.1 million missed the consensus mark of $611 million. The top line fell 1.5% from $597.3 million reported in the prior-year quarter.
Food and Beverage revenues (34.4% of total revenues in the reported quarter) declined 0.9% year over year to $202.4 million. Entertainment revenues (65.6%) fell 1.9% year over year to $385.7 million.
Comps Details
During the quarter under discussion, comparable store sales (including Main Event branded stores) declined 5.6% year over year.
Operating Highlights
During the quarter under discussion, operating income amounted to $85.5 million compared with $121.4 million in the prior-year quarter. The operating margin was 14.5% compared with 20.2% in the year-ago quarter.
Adjusted EBITDA came in at $159.1 million compared with $182.1 million in the year-earlier quarter. The downside was primarily driven by expenses related to labor and marketing for the rollout of a new menu and service model, the implementation of several new technology systems and an unsuccessful test of an incremental marketing campaign.
Balance Sheet
As of May 5, 2024, cash and cash equivalents were $32.1 million compared with $37.3 million as of Feb 4, 2024.
Year to date (as of May 5, 2024), the company repurchased 1 million shares for an aggregate cost of $50 million. As of May 5, the company had $150 million available for the buyback program.
At the fiscal first-quarter end, net long-term debt totaled approximately $1.29 billion compared with $1.28 billion in the prior quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -12.03% due to these changes.
VGM Scores
At this time, Dave & Buster's has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Dave & Buster's has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.