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Dave & Buster's (PLAY) Stock Up on Q2 Earnings & Revenues Beat

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Dave & Buster's Entertainment, Inc. PLAY reported impressive second-quarter fiscal 2021 results, with earnings and revenues beating the Zacks Consensus Estimate for the third straight quarter. Both the metrics improved year over year. Following the announcement, its shares increased nearly 6.5% in the after-hour trading session on Sep 9.

Dave & Buster’s CEO, Brian Jenkins, stated, “Dave & Buster’s second quarter was clear evidence that the brand is back, posting record revenues and EBITDA with all 142 stores open as of the end of the quarter. The entire team has demonstrated great resilience navigating the pandemic and positioning the Company to achieve new levels of performance.”

Going forward, the company expects the momentum to continue on the back of its strategic initiatives that include new menu, optimized marketing and technology investments.

Earnings & Revenues in Detail

Dave & Busters Entertainment, Inc. Price, Consensus and EPS Surprise

Dave & Busters Entertainment, Inc. Price, Consensus and EPS Surprise
Dave & Busters Entertainment, Inc. Price, Consensus and EPS Surprise

Dave & Busters Entertainment, Inc. price-consensus-eps-surprise-chart | Dave & Busters Entertainment, Inc. Quote

During the fiscal second quarter, the company reported adjusted earnings per share of $1.07, surpassing the Zacks Consensus Estimate of 57 cents. In the year-ago quarter, the company had reported adjusted loss per share of $1.24.

Quarterly revenues of $377.6 million outpaced the consensus mark of $358 million by 5.5%. In the prior-year quarter, the company reported revenues of $50.8 million. The upside was primarily driven by more store operating weeks compared with prior-year quarter’s levels. Resultantly, Amusements and Other as well as Food and Beverage revenues rose significantly.

Food and Beverage revenues (32.6% of total revenues in the fiscal second quarter) surged 723.5% year over year to $123 million. Amusement and Other revenues (67.4%) jumped 752.7% year over year to $254.6 million.

Comps Details

During the fiscal second quarter, comparable store restaurant sales increased 3.6% compared with 2019 levels. The upside was driven by a rise in weekly sales performance owing to an increase in operating weeks. Meanwhile, non-comparable store revenues in the reported quarter came in at $67.3 million, up from $10.4 million in the year-ago quarter.

Operating Highlights

During the fiscal second quarter, operating income came in at $79.2 million against an operating loss of $81.1 million in the prior-year quarter. Operating margin came in at 21% against (159.6%) reported in the prior-year quarter. During the quarter, Adjusted EBITDA came in at $119.2 million against ($38.5) million reported in the prior-year quarter.

Balance Sheet

As of Aug 1, 2021, cash and cash equivalents totaled $107.8 million compared with $20.1 million as of May 2, 2021.

At the end of the fiscal second quarter, net long-term debt totaled $537.8 million compared with $537.1 million in the previous quarter.

Fiscal Q3 Business Update & Outlook

During the first five weeks of third-quarter fiscal 2021, the company reported continued recovery in business with comps increasing 1.3% from 2019 levels. Going forward, the company expects the momentum to continue, assuming the absence of pandemic-related barriers. The company expects third-quarter comparable store sales to be in line with 2019 levels. Also, it anticipates fiscal third-quarter EBITDA to be greater than $39.8 million (reported in third-quarter fiscal 2019).

For fiscal 2021, the company anticipates capital additions (net of tenant allowances) of $95-$100 million. Also, it expects four new store openings and the relocation of one existing location during the fiscal year.

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 same space include Cracker Barrel Old Country Store, Inc. CBRL, The Wendy's Company WEN and Jack in the Box Inc. JACK, each currently carrying a Zacks Rank #2 (Buy).

Cracker Barrel's 2021 earnings are expected to increase 164.2%.

Wendy's has a three-five-year earnings per share growth rate of 9%.

Jack in the Box has a trailing four-quarter earnings surprise of 26.4%, on average.


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