A month has gone by since the last earnings report for Dave & Buster's (PLAY Quick QuotePLAY - Free Report) . Shares have added about 2.2% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Dave & Buster's due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Dave & Buster's Q2 Earnings Beat, Revenues lag Estimates

Dave & Buster's reported mixed second-quarter fiscal 2024 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The top and the bottom line increased on a year-over-year basis.

During the quarter, the company reported strong performance from the remodeled locations. Also, it recorded a positive reception of the new menu, which is driving improvements in food and beverage performance and guest satisfaction. Pricing tests for games and food and beverage offerings have bolstered revenues and margins, with further gains anticipated as optimization continues.

The special events segment experienced substantial growth, with same-store sales increasing significantly both for the second quarter and year to date. Forward bookings for fiscal 2024 are also well ahead of last year. Despite some difficulties with same-store sales in a challenging environment, Dave & Buster's remains focused on its medium-term objectives and anticipates its strategic initiatives to drive growth in same-store sales, revenues, EBITDA and cash flow in upcoming periods.

Earnings & Revenues in Detail

During the fiscal second quarter, the company reported adjusted earnings per share (EPS) of $1.12, beating the Zacks Consensus Estimate of 87 cents. In the year-ago quarter, it reported an adjusted EPS of 94 cents.

Quarterly revenues of $557.1 million missed the consensus mark of $562 million. The top line increased 2.8% from $542.1 million reported in the prior-year quarter.

Food and Beverage revenues (32.6% of total revenues in the reported quarter) inched up 0.6% year over year to $181.4 million. Entertainment revenues (67.4%) increased 4.1% year over year to $375.7 million.

Comps Details

During the quarter under discussion, comparable store sales (including Main Event branded stores) declined 6.3% year over year.

Operating Highlights

During the fiscal second quarter, operating income amounted to $84.5 million compared with $77.1 million in the prior-year quarter. The operating margin was 15.1% compared with 14.3% in the year-ago quarter.

Adjusted EBITDA came in at $151.6 million compared with $140.3 million in the year-earlier quarter.

Balance Sheet

As of Aug. 6, 2024, cash and cash equivalents were $13.1 million compared with $37.3 million as of Feb. 4, 2024.

As of Aug. 6, 2024, the company repurchased 1.2 million shares for an aggregate cost of $60 million. As of the same date, the company had $140 million available for the buyback program.

At the fiscal second-quarter end, net long-term debt totaled approximately $1.29 billion compared with $1.28 billion as of Feb. 4, 2024.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

The consensus estimate has shifted -52.99% due to these changes.

VGM Scores

Currently, Dave & Buster's has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. 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.