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Dave & Buster's (PLAY) Outpaces Industry in the Past 6 Months

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·3 min read
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Shares of Dave & Buster's Entertainment, Inc. PLAY have increased 0.4% in the past six months, against the industry’s sharp decline of 19.9%. The company has been benefiting from strategic initiatives that include a new menu, optimized marketing, technology investments and expansion of entertainment options. Let’s delve deeper.

Growth Drivers

Dave & Buster's continues to perform well on the back of the unique, customizable experience that it offers across its four platforms, “Eat, Drink, Play and Watch.” The company’s distinctive model generates favorable store economics and strong return.

Apart from great food or beverages, the company’s entertainment business has been driving growth. Fourth-quarter fiscal 2021 amusement and other revenues, which accounted for 65% of the total revenues, soared 191.1% year over year to $223 million. The upside was primarily driven by a reduction in discounting and a shift toward higher denomination Power Cards. In fact, it is a major reason behind the company’s success.

The Zacks Rank #3 (Hold) company has been benefiting from a disciplined new store growth strategy in both new and existing markets, given the broad appeal of its brand. Management believes that it can grow the concept to more than 200 units in North America over time. Going forward, the company intends to open two stores in the first quarter of fiscal 2022. In fiscal 2022, the company plans to open eight new stores.

Dave & Buster's digital initiatives are likely to drive growth. The company believes that it can drive traffic by enhancing in-store and out-of-store customer experience via digital and mobile strategic initiatives and the deployment of better technology. The company, thus, intends to leverage its growing loyalty database and continue to invest in other mobile applications to build customer connections and drive frequent customer visitation.

The company continues to focus on simplifying its store operations, improving the guest experience, and enhancing its food and beverage and entertainment offerings to drive sales and profitability. During the first eight weeks of first-quarter fiscal 2022, Dave & Buster's witnessed sustained recovery in business, with comps increasing 5.4% from the 2019 level. Walk-in comparable store sales rose 9.1%, while Special Event comparable-store sales slumped 42% for the eight-week period compared with 2019.

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Zacks Investment Research


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Key Picks

Some better-ranked stocks in the same space are BBQ Holdings, Inc. BBQ, Jack in the Box Inc. JACK and Arcos Dorados Holdings Inc. ARCO.

BBQ Holdings carries a Zacks Rank #2 (Buy). BBQ Holdings has a long-term earnings growth of 14%. Shares of the company have decreased 15.8% in the past year. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for BBQ Holdings' 2022 sales and EPS suggests growth of 40.9% and 66.2%, respectively, from the year-ago period's levels.

Jack in the Box carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 11.8%, on average. Shares of the company have declined 36% in the past year.

The Zacks Consensus Estimate for JACK’s current-year sales growth of 5% from the year-ago period's levels.

Arcos Dorados flaunts a Zacks Rank #2. Arcos Dorados has a long-term earnings growth of 31.3%. Shares of the company have appreciated 22.3% in the past year.

The Zacks Consensus Estimate for Arcos Dorados' 2022 sales and EPS suggests growth of 16.6% and 66.7%, respectively, from the year-ago period's levels.


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