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Is the Dream Run Finally Over for Dave & Buster's Stock?
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Based in Texas, Dave & Buster's Entertainment, Inc. (PLAY - Free Report) posted mixed results for fourth-quarter 2016, wherein the bottom line outpaced the Zacks Consensus Estimate, while the top line lagged the same.
Adjusted earnings per share (EPS) of 63 cents beat the Zacks Consensus Estimate of 58 cents by 8.6% and increased over 18.9% year over year on the back of a higher top line. Also, sales of $270.2 million were up 15.4% on a year-over-year basis, but fell slightly short of the Zacks Consensus Estimate of $270.6 million.
However, the company’s shares declined over 4% in after-hours trading on Mar 28, mirroring investor concerns over soft comparable store sales (comps) growth in the fourth quarter as well as muted 2017 comps guidance.
What’s the Fuss About?
Notably, Dave & Buster's began trading in Oct 2014 and has been an incredible performer for a long time now, with shares gaining nearly 260%, since the launch of its IPO.
The core concept of this restaurant chain is “Eat Drink Play and Watch”, all in one location. Its menu comprises “Fun American New Gourmet” entrées and appetizers, and a full selection of non-alcoholic and alcoholic beverages.
However, over the past few quarters, the U.S. restaurant space has not been too enticing for investors. Consumer behavior has been volatile and their willingness to spend on eating out diminished due to higher costs. Resultantly, same-store sales growth had been dull in a difficult sales environment. In fact, a soft industry backdrop has been keeping Dave & Buster's comps under check as well.
Evidently, comps at Dave & Buster's increased a mere 3.2% in the fourth quarter of 2016 compared with a 6.0% increase last year. In fact, the figure was also lower than the 5.9% growth registered last quarter.
Notably, the company announced that for 2017 it expects sales in the range of $1.15--$1.17 billion. Meanwhile, comps are projected to grow just 2–3%.
Bottom Line
So far, Dave & Buster’s Entertainment has had a phenomenal run. Moving ahead, the company believes that it is well positioned for long-term growth on the back of a unique business style and various sales-building initiatives.
However, the company continues to face stiff competition from the likes of McDonald's Corp. (MCD - Free Report) , BJ's Restaurants, Inc. (BJRI - Free Report) and Darden Restaurants, Inc. (DRI - Free Report) .
Moreover, the company’s strong comps were a major growth driver in the past. Thus, subdued expectations for the same this year given continued softening in the macro environment, suggests that the “dream run” might finally be over for Dave and Buster's investors.
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Is the Dream Run Finally Over for Dave & Buster's Stock?
Based in Texas, Dave & Buster's Entertainment, Inc. (PLAY - Free Report) posted mixed results for fourth-quarter 2016, wherein the bottom line outpaced the Zacks Consensus Estimate, while the top line lagged the same.
Adjusted earnings per share (EPS) of 63 cents beat the Zacks Consensus Estimate of 58 cents by 8.6% and increased over 18.9% year over year on the back of a higher top line. Also, sales of $270.2 million were up 15.4% on a year-over-year basis, but fell slightly short of the Zacks Consensus Estimate of $270.6 million.
However, the company’s shares declined over 4% in after-hours trading on Mar 28, mirroring investor concerns over soft comparable store sales (comps) growth in the fourth quarter as well as muted 2017 comps guidance.
What’s the Fuss About?
Notably, Dave & Buster's began trading in Oct 2014 and has been an incredible performer for a long time now, with shares gaining nearly 260%, since the launch of its IPO.
Dave & Buster's Entertainment, Inc. Price
Dave & Buster's Entertainment, Inc. Price | Dave & Buster's Entertainment, Inc. Quote
The core concept of this restaurant chain is “Eat Drink Play and Watch”, all in one location. Its menu comprises “Fun American New Gourmet” entrées and appetizers, and a full selection of non-alcoholic and alcoholic beverages.
However, over the past few quarters, the U.S. restaurant space has not been too enticing for investors. Consumer behavior has been volatile and their willingness to spend on eating out diminished due to higher costs. Resultantly, same-store sales growth had been dull in a difficult sales environment. In fact, a soft industry backdrop has been keeping Dave & Buster's comps under check as well.
Evidently, comps at Dave & Buster's increased a mere 3.2% in the fourth quarter of 2016 compared with a 6.0% increase last year. In fact, the figure was also lower than the 5.9% growth registered last quarter.
Notably, the company announced that for 2017 it expects sales in the range of $1.15--$1.17 billion. Meanwhile, comps are projected to grow just 2–3%.
Bottom Line
So far, Dave & Buster’s Entertainment has had a phenomenal run. Moving ahead, the company believes that it is well positioned for long-term growth on the back of a unique business style and various sales-building initiatives.
However, the company continues to face stiff competition from the likes of McDonald's Corp. (MCD - Free Report) , BJ's Restaurants, Inc. (BJRI - Free Report) and Darden Restaurants, Inc. (DRI - Free Report) .
Moreover, the company’s strong comps were a major growth driver in the past. Thus, subdued expectations for the same this year given continued softening in the macro environment, suggests that the “dream run” might finally be over for Dave and Buster's investors.
Dave & Buster's currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>