Dave & Buster’s Entertainment, Inc. (NASDAQ: PLAY) fell sharply Wednesday following a fourth quarter results that saw disappointing comp, despite outperforming the entire industry. Earnings came ahead of consensus estimates, and same-store sales grew 3.2 percent, just short of the streets 3.7 percent target.
Following the release, Canaccord Genuity maintained a Buy rating and $67 price target on the company, saying the comp shortfall was mostly due to an unfavorable Q4 calendar shift. Dave & Buster’s did deliver a solid Q4 despite high expectations, with new unit performance remaining strong.
“We would be buyers on the weakness given best-in-class unit economics, double-digit annual unit growth, and our belief that SSS will continue to outperform the industry,” analyst Lynne Collier said.
Dave & Busters managed to outperform the Knapp-Track casual dining benchmark by 600 basis points. The company’s class of 2015 stores have been performing exceptionally well, with 52 percent cash-on-cash return in their first year of operation, but a honeymoon effect tends to have a significant effect on new Dave & Busters locations. Volumes tend to drop 10-20 percent in year two.
The firm trimmed 2017 EPS estimates slightly to $2.40, from $2.42, due to lower restaurant margins and higher deprecation, while maintaining 2018 EPS estimate of $2.72, representing a 13.3 percent growth rate.
Dave and Busters shares dropped 3.3 percent to close at $60.09.
Dave & Buster's 'Disappointing' Comps Still Managed To Outperform The Entire Industry In Q4
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Latest Ratings for PLAY
|Mar 2017||Maxim Group||Initiates Coverage On||Buy|
|Dec 2016||SunTrust Robinson Humphrey||Initiates Coverage On||Buy|
|Oct 2016||Wells Fargo||Initiates Coverage On||Outperform|
View More Analyst Ratings for PLAY
View the Latest Analyst Ratings
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