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Factors Likely to Shape Dave & Buster's (PLAY) Q1 Earnings

Zacks Equity Research

Dave & Buster’s Entertainment, Inc. PLAY is scheduled to report first-quarter fiscal 2019 results on Jun 11. In fourth-quarter fiscal 2018, the company’s earnings surpassed the Zacks Consensus Estimate by 19.1%. Also, it has an average four-quarter positive surprise of 21.8%.

How are Estimates Faring?

The Zacks Consensus Estimate for first-quarter earnings moved up by 2 cents to $1.14 over the past 7 days This reflects a 9.6% gain from $1.04 registered in the year-ago quarter. Revenues are expected to be $370.5 million, up 11.5% year over year.

Factors at Play

Dave & Buster's first-quarter results are likely to gain from robust sales-building initiatives, relentless expansion plans, solid performance of food or beverages and entertainment business. This apart, its exclusive business model focuses on the entertainment business alongside food and beverage offerings. The dual model is helping the company generate favorable store economics and strong returns in the quarter under review. The company’s efforts to enhance in-store and out-of-store customer experience via digital and mobile strategic initiatives are added positives.

On the bottom-line front, Dave & Buster's shift toward an increased focus on amusement is leading to solid earnings growth in the first quarter, given its higher-margin business. We expect the company’s entertainment business to carry the growth story forward.

However, higher labor costs due to increased wages are expected to persistently keep margins under pressure. Furthermore, the non-franchised model makes the company susceptible to increased expenses. Since all its restaurants are owned and operated by Dave & Buster’s, instead of signing franchise agreements and putting the burden of costs into the franchise, the company is solely responsible for the expenses of operating the business.

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

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

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

What the Zacks Model Unveils

Our proven model shows that Dave & Buster’s is likely to beat earnings estimates in first-quarter fiscal 2019. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Dave & Buster’s has an Earnings ESP of +0.15% and a Zacks Rank #3, which makes us confident about an earnings surprise. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks Poised to Beat Earnings Estimates

General Mills GIS has an Earnings ESP of +1.18% and a Zacks Rank #2.

CarMax KMX has an Earnings ESP of +2.80% and a Zacks Rank #3.

Lovesac Company LOVE has an Earnings ESP of +11.58% and a Zacks Rank #3.

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