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Dave & Buster's (PLAY) Up 36% in Three Months: More Upside Left?
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Dave & Buster's Entertainment, Inc. (PLAY - Free Report) is poised to benefit from digital efforts, store expansions and marketing initiatives. This, the focus on the remodel program and the multiphase approach of the D&B menu rollout bode well.
Shares of Dave & Buster's have outperformed the industry in the past three months. The stock has gained 36.1% compared with the industry’s 9.6% growth. Moreover, an upward revision in earnings estimates for the fiscal 2024 reflects analysts’ optimism in the company’s growth potential. In the past 60 days, the Zacks Consensus Estimate for fiscal 2024 earnings per share (EPS) has moved from $3.03 to $3.19.
Growth Catalysts
The company's effective testing of initiatives in marketing, pricing, food and beverage, remodels and special events pave the way for their broader implementation in the near future, with expectations of significant enhancements in revenues, profitability and cash flow. The company is dedicated to maintaining efficiency, resulting in a reduction in its recurring cost base. Strategically opening new stores has proven to be a lucrative investment, providing attractive returns. The company has also been prudent in returning capital to shareholders in a highly-accretive manner. The company maintains confidence in achieving the $1-billion adjusted EBITDA target for fiscal 2024.
Image Source: Zacks Investment Research
During the third quarter of fiscal 2023, the company provided a detailed progress update on its six key organic growth initiatives. Firstly, in Marketing Optimization, significant progress has been achieved in enhancing conversion and guest frequency through targeted investments in digital marketing technology infrastructure. Anticipated positive outcomes are expected in early fiscal 2024, utilizing personalized communications based on data-driven learnings.
Secondly, the company is investing in Strategic Game Pricing to optimize game prices, addressing a historical lack of a robust game pricing strategy. Encouraging results from tests have been noted and strategies will be fine-tuned before broader implementation.
In terms of Improved Food and Beverage, Phase 2 of the D&B menu of the future, focusing on operational execution, has been successfully launched system-wide. This phase has led to a 5% increase in food and beverage revenue per check, nearly 100 basis points improvement in F&B COGS and an enhanced guest experience. The company emphasizes the testing of Phase 3, thereby witnessing gradual enhancements in food checks, overall satisfaction scores and F&B attach rates, surpassing the positive outcomes observed during Phase 2.
Remodels have shown promising financial results in initial tests, particularly in Friendswood, Texas, exceeding expectations. A broader program to remodel stores for overall revenue growth, improved F&B sales and brand relevancy is in progress, with plans to accelerate the pace based on positive outcomes.
Additional resources have been invested in Special Events, resulting in an 80% higher special event upsell revenue growth in stores with dedicated sales managers. The company expects to increase sales in special events by introducing more entertainment options tailored for groups, enhancing guest engagement and collecting valuable guest data analytics through the implementation of a digital guest platform.
In Technology Enablement, initiatives include the rollout of OneDine server tablets, an updated IT infrastructure, a new ERP, and testing of footfall traffic technology. The company believes these initiatives will contribute to additional revenue and adjusted EBITDA.
In summary, the company expresses confidence in these organic growth initiatives, anticipating significant shareholder value. The combination of operational achievements, ongoing efforts to reduce costs and the strategic opening of new stores reflects progress toward long-term goals.
Zacks Rank & Other Key Picks
Dave & Buster’s currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the Zacks Retail-Wholesale sector are:
Arcos Dorados Holdings Inc. (ARCO - Free Report) sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 28.3% on average. Shares of ARCO have surged 39.3% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for ARCO’s 2024 sales and EPS indicates 10.6% and 15.5% growth, respectively, from the year-ago period’s levels.
Chipotle Mexican Grill, Inc. (CMG - Free Report) carries a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 5.8%, on average. Shares of CMG have increased 49.3% in the past year.
The Zacks Consensus Estimate for CMG’s 2024 sales and EPS indicates 13.3% and 19.5% growth, respectively, from the year-ago period’s levels.
Darden Restaurants, Inc. (DRI - Free Report) carries a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 4.2%, on average. The stock has gained 8.5% in the past year.
The Zacks Consensus Estimate for DRI’s 2024 sales and EPS suggests rises of 9.9% and 10.9%, respectively, from the year-ago period’s levels.
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Dave & Buster's (PLAY) Up 36% in Three Months: More Upside Left?
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) is poised to benefit from digital efforts, store expansions and marketing initiatives. This, the focus on the remodel program and the multiphase approach of the D&B menu rollout bode well.
Shares of Dave & Buster's have outperformed the industry in the past three months. The stock has gained 36.1% compared with the industry’s 9.6% growth. Moreover, an upward revision in earnings estimates for the fiscal 2024 reflects analysts’ optimism in the company’s growth potential. In the past 60 days, the Zacks Consensus Estimate for fiscal 2024 earnings per share (EPS) has moved from $3.03 to $3.19.
Growth Catalysts
The company's effective testing of initiatives in marketing, pricing, food and beverage, remodels and special events pave the way for their broader implementation in the near future, with expectations of significant enhancements in revenues, profitability and cash flow. The company is dedicated to maintaining efficiency, resulting in a reduction in its recurring cost base. Strategically opening new stores has proven to be a lucrative investment, providing attractive returns. The company has also been prudent in returning capital to shareholders in a highly-accretive manner. The company maintains confidence in achieving the $1-billion adjusted EBITDA target for fiscal 2024.
Image Source: Zacks Investment Research
During the third quarter of fiscal 2023, the company provided a detailed progress update on its six key organic growth initiatives. Firstly, in Marketing Optimization, significant progress has been achieved in enhancing conversion and guest frequency through targeted investments in digital marketing technology infrastructure. Anticipated positive outcomes are expected in early fiscal 2024, utilizing personalized communications based on data-driven learnings.
Secondly, the company is investing in Strategic Game Pricing to optimize game prices, addressing a historical lack of a robust game pricing strategy. Encouraging results from tests have been noted and strategies will be fine-tuned before broader implementation.
In terms of Improved Food and Beverage, Phase 2 of the D&B menu of the future, focusing on operational execution, has been successfully launched system-wide. This phase has led to a 5% increase in food and beverage revenue per check, nearly 100 basis points improvement in F&B COGS and an enhanced guest experience. The company emphasizes the testing of Phase 3, thereby witnessing gradual enhancements in food checks, overall satisfaction scores and F&B attach rates, surpassing the positive outcomes observed during Phase 2.
Remodels have shown promising financial results in initial tests, particularly in Friendswood, Texas, exceeding expectations. A broader program to remodel stores for overall revenue growth, improved F&B sales and brand relevancy is in progress, with plans to accelerate the pace based on positive outcomes.
Additional resources have been invested in Special Events, resulting in an 80% higher special event upsell revenue growth in stores with dedicated sales managers. The company expects to increase sales in special events by introducing more entertainment options tailored for groups, enhancing guest engagement and collecting valuable guest data analytics through the implementation of a digital guest platform.
In Technology Enablement, initiatives include the rollout of OneDine server tablets, an updated IT infrastructure, a new ERP, and testing of footfall traffic technology. The company believes these initiatives will contribute to additional revenue and adjusted EBITDA.
In summary, the company expresses confidence in these organic growth initiatives, anticipating significant shareholder value. The combination of operational achievements, ongoing efforts to reduce costs and the strategic opening of new stores reflects progress toward long-term goals.
Zacks Rank & Other Key Picks
Dave & Buster’s currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the Zacks Retail-Wholesale sector are:
Arcos Dorados Holdings Inc. (ARCO - Free Report) sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 28.3% on average. Shares of ARCO have surged 39.3% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for ARCO’s 2024 sales and EPS indicates 10.6% and 15.5% growth, respectively, from the year-ago period’s levels.
Chipotle Mexican Grill, Inc. (CMG - Free Report) carries a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 5.8%, on average. Shares of CMG have increased 49.3% in the past year.
The Zacks Consensus Estimate for CMG’s 2024 sales and EPS indicates 13.3% and 19.5% growth, respectively, from the year-ago period’s levels.
Darden Restaurants, Inc. (DRI - Free Report) carries a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 4.2%, on average. The stock has gained 8.5% in the past year.
The Zacks Consensus Estimate for DRI’s 2024 sales and EPS suggests rises of 9.9% and 10.9%, respectively, from the year-ago period’s levels.