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Here's How Dave & Buster's (PLAY) Became One Of 2016's Best Stocks
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Restaurant and gaming company Dave & Buster's Entertainment Inc. (PLAY - Free Report) was recently added to the Zacks Rank #1 (Strong Buy) list, but the stock has been on an amazing run for months. Despite the difficulties faced by the restaurant industry, shares of PLAY are up nearly 35% year-to-date and the stock has become one of 2016’s most impressive performers.
Last week, Dave & Buster's hit a new 52-week high after posting strong third-quarter results. The company reported earnings of 25 cents per share on revenues of $228.7 million, which both beat the Zacks Consensus Estimate. These figures represent EPS growth of 108% and revenue growth of 18.6% on a year-over-year basis (Also read: Dave & Buster's Just Hit a New 52-Week High).
The restaurant’s strong performance was underscored by its impressive comparable store sales growth. Comps increased 5.9% in the third quarter, and the company said that it expects Q4 comps to grow between 2.5% and 4.5%.
The fact that Dave & Buster’s is seeing such strong comps growth is surprising based on the struggles of the rest of the restaurant industry. Despite domestic economic growth, restaurant sales have been hampered by rising healthcare costs, tightened credit availability, unfavorable currency headwinds, and a cooling Chinese economy.
In fact, this chart highlights just how severely PLAY is outperforming its peers:
The reason that Dave & Buster’s sticks out among other retail restaurants is its unique focus on gaming. It’s right there in the company’s slogan: “Eat, Drink, Play and Watch.”
Each Dave & Buster’s restaurant is a unique combination between an arcade and a dining room. While it’s certainly a solid spot for decent sit-down food, it also attracts customers who want more of an experience out of their meal.
In the latest quarter, amusement and other revenues account for 56% of the company’s total revenue. In the same quarter last year, amusement represented about 53.4% of total revenue. This shift towards a higher focus on amusement has benefitted Dave & Buster’s earnings because it is a higher-margin business, and its gaming offerings have helped cushion the blow felt by other restaurants.
Consumer behavior can be tricky to gauge, but it’s clear that Dave & Buster’s was able to benefit from a slightly increased focus on gaming and amusement. As a result, this new Zacks Rank #1 (Strong Buy) has been one of the best stocks of 2016.
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Here's How Dave & Buster's (PLAY) Became One Of 2016's Best Stocks
Restaurant and gaming company Dave & Buster's Entertainment Inc. (PLAY - Free Report) was recently added to the Zacks Rank #1 (Strong Buy) list, but the stock has been on an amazing run for months. Despite the difficulties faced by the restaurant industry, shares of PLAY are up nearly 35% year-to-date and the stock has become one of 2016’s most impressive performers.
Last week, Dave & Buster's hit a new 52-week high after posting strong third-quarter results. The company reported earnings of 25 cents per share on revenues of $228.7 million, which both beat the Zacks Consensus Estimate. These figures represent EPS growth of 108% and revenue growth of 18.6% on a year-over-year basis (Also read: Dave & Buster's Just Hit a New 52-Week High).
The restaurant’s strong performance was underscored by its impressive comparable store sales growth. Comps increased 5.9% in the third quarter, and the company said that it expects Q4 comps to grow between 2.5% and 4.5%.
The fact that Dave & Buster’s is seeing such strong comps growth is surprising based on the struggles of the rest of the restaurant industry. Despite domestic economic growth, restaurant sales have been hampered by rising healthcare costs, tightened credit availability, unfavorable currency headwinds, and a cooling Chinese economy.
In fact, this chart highlights just how severely PLAY is outperforming its peers:
The reason that Dave & Buster’s sticks out among other retail restaurants is its unique focus on gaming. It’s right there in the company’s slogan: “Eat, Drink, Play and Watch.”
Each Dave & Buster’s restaurant is a unique combination between an arcade and a dining room. While it’s certainly a solid spot for decent sit-down food, it also attracts customers who want more of an experience out of their meal.
In the latest quarter, amusement and other revenues account for 56% of the company’s total revenue. In the same quarter last year, amusement represented about 53.4% of total revenue. This shift towards a higher focus on amusement has benefitted Dave & Buster’s earnings because it is a higher-margin business, and its gaming offerings have helped cushion the blow felt by other restaurants.
Consumer behavior can be tricky to gauge, but it’s clear that Dave & Buster’s was able to benefit from a slightly increased focus on gaming and amusement. As a result, this new Zacks Rank #1 (Strong Buy) has been one of the best stocks of 2016.
Stocks that Aren't in the News. Yet.
You are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buys" free of charge. Many of these companies are almost unheard of by the general public and just starting to get noticed by Wall Street. They have been pinpointed by the Zacks system that nearly tripled the market from 1988 through 2015 with a stellar average gain of +26% per year. See these high-potential stocks free >>