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Dave & Buster's (PLAY) Q2 Earnings Lag Estimates, Revenues Top

Dave & Buster's Entertainment, Inc. PLAY reported mixed second-quarter fiscal 2022 results, with earnings missing the Zacks Consensus Estimate and revenues beating the same. The top line rose year over year, while the bottom line declined year over year.

Following the announcement, the company’s shares dropped 2.6% in the after-hours trading session on Sep 7. The company faced negative investor sentiments, citing a challenging macro environment, including inflationary pressures on labor and commodities. The company anticipates the headwinds to persist over the next few quarters.

Earnings & Revenues in Detail

During the fiscal second quarter, the company reported adjusted earnings per share (EPS) of 61 cents, which missed the Zacks Consensus Estimate of $1.01. In the year-ago quarter, it had reported adjusted EPS of $1.07.

Dave & Buster's Entertainment, Inc. Price, Consensus and EPS Surprise

 

Dave & Buster's Entertainment, Inc. Price, Consensus and EPS Surprise
Dave & Buster's Entertainment, Inc. Price, Consensus and EPS Surprise

Dave & Buster's Entertainment, Inc. price-consensus-eps-surprise-chart | Dave & Buster's Entertainment, Inc. Quote

 

Quarterly revenues of $468.4 million surpassed the consensus mark of $432 million. In the prior-year quarter, the company reported revenues of $377.6 million. Revenues jumped 35.9% compared with second-quarter fiscal 2019.

Food and Beverage revenues (33.5% of total revenues in the fiscal second quarter) soared 27.6% year over year to $157 million. Amusement and Other revenues (66.5%) increased 22.3% year over year to $311.4 million.

Comps Details

During the fiscal second quarter, comparable store sales increased 9.6% compared with the 2019 level. Non-comparable store revenues in the reported quarter were $84.7 million, up from $69.2 million in the year-ago quarter.

Operating Highlights

During the fiscal second quarter, operating income amounted to $56.5 million compared with $79.2 million in the prior-year quarter. The downside was primarily due to a rise in pre-opening and stock-based compensation expenses as well as transaction costs related to the acquisition of Main Event. The operating margin was 12.1% compared with 21% reported in the prior-year quarter. During the quarter, adjusted EBITDA was $119.6 million compared with $119.2 million reported in the prior-year quarter.

Balance Sheet

As of Jul 31, 2022, cash and cash equivalents totaled $100.4 million compared with $139.1 million as of May 1, 2022.

At the end of the fiscal second quarter, net long-term debt totaled $1,219.7 million compared with $432 million at the end of first-quarter fiscal 2022.

Fiscal Q3 Business Update

During the first five weeks of third-quarter fiscal 2022, the company’s comps rose 22.1% from the 2019 level. Walk-in comparable store sales rose 24.7%, while Special Event comparable store sales declined 4.2% in the five-week period compared with 2019.

Zacks Rank & Key Picks

Dave & Buster’s currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the Zacks Retail-Wholesale sector are Tecnoglass Inc. TGLS, Cracker Barrel Old Country Store, Inc. CBRL and Arcos Dorados Holdings Inc. ARCO.

Tecnoglass sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 24.4%, on average. Shares of the company have increased 7% in the past three months.

The Zacks Consensus Estimate for Tecnoglass 2022 sales and EPS suggests growth of 28.2% and 47.7%, respectively, from the year-ago period’s levels.

Cracker Barrel carries a Zacks Rank #2 (Buy). Cracker Barrel has a long-term earnings growth of 6.9%. Shares of the company have increased 14% in the past three months.

The Zacks Consensus Estimate for Cracker Barrel’s 2022 sales and EPS suggests growth of 16.3% and 15.4%, respectively, from the year-ago period’s levels.

Arcos Dorados carries a Zacks Rank #2. Arcos Dorados has a long-term earnings growth of 34.4%. Shares of the company have risen 38% in the past year.

The Zacks Consensus Estimate for Arcos Dorados’ 2022 sales and EPS suggests growth of 27.1% and 104.2%, respectively, from the year-ago period’s levels.


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