Dave & Buster's Q2 Preview: Time to Party?
The Zacks Retail and Wholesale Sector has tumbled in 2022, down more than 20% and widely underperforming the general market.
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A widely-recognizable stock in the sector, Dave & Buster’s Entertainment PLAY, is scheduled to unveil Q2 earnings on September 7th after the market close.
Dave & Buster’s Entertainment is a leading owner and operator of high-volume venues in North America that combine dining and entertainment for both adults and families.
Currently, the entertainment titan carries a Zacks Rank #3 (Hold) paired with an overall VGM Score of an A. How does everything shape up heading into the print? Let’s find out.
Share Performance & Valuation
Year-to-date, Dave & Buster’s shares have been notably strong, providing investors with a stellar 8% return and extensively outperforming the general market.
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Over the last month, PLAY shares have continued on their market-beating trajectory, increasing by nearly 6% in value and crushing the S&P 500 in this timeframe as well.
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The strong price action of Dave & Buster’s shares tells us that buyers have been defending the stock all year long, undoubtedly a positive amid all of the red YTD returns in 2022.
In addition to favorable price action, PLAY shares carry rock-solid valuation levels, further displayed by its Style Score of an A for Value.
The company’s 1.1X forward P/S ratio is nicely below its five-year median of 1.4X and represents a steep 18% discount relative to its Zacks Sector.
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Quarterly Estimates
Analysts have been bearish in their earnings outlook over the last several months, with three downwards revisions hitting the tape. The Zacks Consensus EPS Estimate of $1.01 pencils in a 5.6% Y/Y decrease in quarterly earnings.
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However, the company’s top-line is in much better shape, most likely a reflection of soaring costs weighing heavily on margins. The Zacks Consensus Sales Estimate of $432 million reflects year-over-year revenue growth of a substantial 15%.
Quarterly Performance & Market Reactions
Dave & Buster’s has consistently surpassed bottom-line estimates, exceeding the Zacks Consensus EPS Estimate in eight of its previous ten quarters. Just in its latest print, PLAY registered a remarkable 17% bottom-line beat.
Top-line results have also been consistently reported above expectations as of late, with Dave & Buster’s penciling in five revenue beats over its last six quarters. Below is a chart illustrating the company’s revenue on a quarterly basis.
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In addition, the market has had stellar reactions in response to the company’s quarterly prints recently, with shares moving upwards by double-digit percentages following each of PLAY’s last three earnings releases.
Putting Everything Together
Dave and Buster’s shares have been notably hot year-to-date and over the last month, signaling that buyers have been out in full force.
The company carries solid valuation levels, with its forward P/S ratio nicely beneath its five-year median and Zacks Sector.
Analysts have been bearish in their earnings outlook, with estimates reflecting a decline in earnings but an uptick in revenue – a reflection of margin compression.
Further, PLAY has consistently exceeded quarterly estimates, and the market has reacted strongly following each of its last three prints.
Heading into the release, Dave & Buster’s PLAY carries a Zacks Rank #3 (Hold) with an Earnings ESP Score of 3%.
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Dave & Buster's Entertainment, Inc. (PLAY) : Free Stock Analysis Report
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