CEC Entertainment jumps on 3rd-quarter results

CEC Entertainment soars after 3rd-quarter profit tops Walls Street expectations

• On 12:12 pm EDT, Friday October 30, 2009

NEW YORK (AP) -- Shares of CEC Entertainment Inc. jumped Friday after the Chuck E. Cheese owner's third-quarter earnings easily beat Wall Street's expectations.

Late Thursday the Irving, Texas company said its quarterly profit climbed 28 percent to 55 cents per share. The results surpassed the 46 cents-per-share estimate of analysts surveyed by Thomson Reuters. Analysts' estimates normally exclude one-time items.

While revenue dipped 2 percent to $197.8 million, the results also topped Wall Street's forecast for sales of $195.7 million.

"Overall, solid results in light of a very difficult environment," Sterne Agee's Lynne Collier wrote in a client note.

The analyst reiterated a "Buy" rating.

Brad Ludington of KeyBanc Capital Markets said the swine flu, which significantly squeezed second-quarter results, appeared to not be as big of an issue in the third quarter as children returned for pizza and games.

"While management continues to believe that H1N1 flu is having a negative effect on business as potential guests are sick at home with the flu, it is not observing the panic that contributed to sharply lower sales at restaurants open at least a year in the second quarter," he wrote.

Sales at restaurants open at least a year is a key indicator of a restaurant operator's performance because it measures growth at existing stores rather than newly opened ones.

Ludington maintained a "Buy" rating and $40 price target.

CEC's stock added $3.51, or 14 percent, to $28.84 in midday trading.

Buzz up!