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Dave & Buster's (PLAY) Q4 Earnings Beat Estimates, Up Y/Y

Zacks Equity Research

Dave & Buster's Entertainment, Inc. PLAY reported fourth-quarter preliminary unaudited fiscal 2019 results. The company’s earnings and revenues surpassed the Zacks Consensus Estimate. Notably, this marked the company’s third straight quarter of earnings beat. Both earnings and revenues have improved year over year. Following the quarterly results, shares of the company increased 5.4% during after-hours trading on Apr 2.

In the quarter under review, adjusted earnings came in at 80 cents per share, which outpaced the Zacks Consensus Estimate of 70 cents. The metric also improved 6.7% on a year-over-year basis.

Let’s delve into the quarterly numbers.

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

 

Detailed Revenue Discussion

Quarterly revenues of $347.2 million surpassed the consensus mark of $344 million. The top line also rose 4.6% from the prior-year quarter’s number. The upside was primarily driven by consistent unit growth, and robust Amusements and Other revenues as well as Food and Beverage revenues.

Food and Beverage revenues (44% of total revenues in fiscal fourth quarter) increased 3.5% year over year to $152.8 million, and Amusement and Other revenues (56%) rose 5.6% to $194.4 million.

Meanwhile, overall comps declined 4.7% in fiscal fourth quarter compared with 2.9% increase in the year-ago quarter’s figure. The downtick was caused by a 5.5% decline in walk-in sales and flat special events sales. Moreover, comps at Amusements & Other dropped 4.1%, while the same at Food & Beverage declined 5.5%.

Non-comparable store revenues in the reported quarter increased 46.5% from the year-ago quarter to $62.6 million.

Operating Highlights

In fiscal fourth quarter, operating margin contracted roughly 160 basis points (bps) year over year to 10.8%.

Adjusted EBITDA was reported at $77.8 million compared with $80.1 million in the same period last year. Meanwhile, the EBITDA margin contracted 180 bps year over year to 22.4%.

Balance Sheet

As of Feb 2, cash and cash equivalents totaled $24.7 million compared with $21.6 million as of Feb 3.

Long-term debt summed $632.7 million at the end of the reported quarter, up from $378.5 million at the end of Feb 3.

The company has not repurchased any shares since September 2019 and has no plans to do so in the foreseeable future. Moreover, the company’s quarterly dividend and share repurchase program have been indefinitely suspended due to the coronavirus outbreak.

Store Development

Dave & Buster’s launched two stores during the fiscal fourth quarter in Canton, OH and Shenandoah, TX. In fiscal 2019, the company opened 16 stores in new locations that represents unit growth of 12.4%.

2019 Highlights

Total revenues in 2019 increased 7.1% to $1,354.7 million from $1,265.3 million in 2018. The increase was driven by an 8.5% increase in Amusements and Other revenues and a 5.1% increase in Food andBeverage revenues.

Operating income in 2019 totaled $148.1 million (10.9% of revenues) compared with $161.0 million (12.7% of revenues) in 2018.

Diluted earnings per share for 2019 was reported at $2.94 compared with the year-ago quarter’s figure of $2.93. 

Adjusted EBITDA in 2019 totaled $308.2 million (22.8% of revenues) compared with $311.1 million (24.6% or revenues) in 2018.

2020 Guidance

Owing to the unprecedented and evolving nature of the coronavirus outbreak, the company has not provided its fiscal 2020 financial guidance at this time.

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 worth considering in the same space include Cracker Barrel Old Country Store, Inc. CBRL, BJ's Restaurants, Inc. BJRI and Chuy's Holdings, Inc. CHUY. Cracker Barrel sports a Zacks Rank #1, while BJ's Restaurants and Chuy's Holdings carry a Zacks Rank #2 (Buy). 

Cracker Barrel has trailing four-quarter positive earnings surprise of 7.8%, on average. The company’s earnings beat the Zacks Consensus Estimate in all of the last four quarters.

BJ's Restaurants has an expected three-five year earnings per share growth rate of 15%.

2021 earnings for Chuy's Holdings are expected to surge 130.9%.

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