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Dave & Buster's Entertainment Plummets on Lower Comparable Sales

Shares of Dave & Buster's Entertainment Inc. (NASDAQ:PLAY) plummeted 14.23% to $37.50 in after-hours trading on Tuesday following the release of financial results for the second quarter of its fiscal 2019, which ended on Aug. 4.

The market wasn't pleased with the 1.8% drop in same-store sales due to a 2% decline in Dave & Buster's recorded walk-in sales. In contrast, special events sales rose 0.1%, but it was not enough to offset the decline.

The Dallas-based American restaurant and entertainment company also posted GAAP earnings per share of 90 cents, up 7.1% year-over-year, beating consensus estimates by 6 cents.

Revenue increased 8% year-over-year to approximately $344.6 million, matching projections. By segment, food and beverage jumped 6% to nearly $138 million in revenue, and amusement and other revenues went up 9.4% to $206.7 million.

"We continue to deliver strong revenue and earnings per share growth - including record second quarter sales, EBITDA and EPS - while investing for the future and returning substantial capital to shareholders through dividends and share repurchases," CEO Brian Jenkins said in a statement.

Moreover, the Ebitda was $79 million in the second quarter of fiscal 2019, up 5.3% from the second quarter of fiscal 2018.

Looking ahead to full fiscal 2019, Dave & Buster's Entertainment Inc. guided for revenue ranging between $1.338 billion and $1.359 billion, compared to $1.37 billion consensus.

In the second quarter of fiscal 2019, the company repurchased 3.4 million shares of its own common stock spending $137 million and paid a 15 cents cash quarterly dividend per common share. Currently, the authorization to repurchase shares is for up to $800 million.

The balance sheet had $23.3 million in cash and cash equivalents, and $552.1 million in total debt as of Aug. 4.

The stock price decreased 23% versus the Nasdaq's 1.4% gain in the past year through Sept. 10. The share price at close on Tuesday was $43.72 for a market capitalization of $1.59 billion. Also, the share price was under the 200- and 100-day simple moving average lines, but still above the 50-day simple moving average line.

The 14-day relative strength index of 63 suggests the stock is neither oversold nor overbought.

The 52-week range is $37.21 to $67.05.

The forward dividend yield is 1.41% versus the industry median of 1.78% as of Sept. 10.

Sell-side analysts in Wall Street issued an overweight recommendation rating for shares of Dave & Buster's Entertainment Inc., with an average target price of $47.

Disclosure: I have no positions in any securities mentioned.

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This article first appeared on GuruFocus.