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Here's Why Investors Should Retain Dave & Buster's (PLAY) Stock
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Dave & Buster's Entertainment, Inc. (PLAY - Free Report) is likely to benefit from store expansions, remodeling efforts and digital initiatives. Also, the emphasis on pricing adjustments bodes well. However, dismal comps and an uncertain macroeconomic environment are a concern.
Let us discuss the factors highlighting why investors should retain the stock now.
Growth Catalysts
Expansion Efforts: Dave & Buster's continues to pursue a disciplined new store-growth strategy in new and existing markets, given the broad appeal of its brand. In the fiscal 2023, the company opened 16 new stores, including 11 Dave & Buster's outlets and five Main Events venues. Following the openings, the company reported solid performances in regard to the same. The company stated an extensive pipeline of new units for opening in the upcoming years. To this end, the company enhanced its strategy for opening new units to better seize immediate demand by utilizing its loyalty database to gather more relevant data about new customers and markets. This optimization is forecasted to improve frequency management and generate greater returns on capital invested in new stores.
Remodeling Initiative: The company emphasizes updating the layout and appearance of its D&B stores to boost foot traffic and overall productivity. It also uses technology to support guest engagement and introduces fresh entertainment options to attract customers for walk-in and particular event business.
Remodels have shown promising financial results in initial tests, particularly in Friendswood, Texas, exceeding expectations. The company has initiated eight test remodels and reported strong feedback with respect to the same. Following the testing and financial observations, the company intends a planned rollout of the remodel program to the remaining D&B locations in 2024 and beyond. It intends to adhere to a stage gate process focused on achieving a 20% or higher return threshold. The company intends to remodel 40 to 45 stores in fiscal 2024.
Sales Building Initiatives: PLAY has been actively exploring and experimenting with pricing adjustments across its gaming ecosystem, gaining valuable insights from various tests conducted in different regions. In the fourth quarter of fiscal 2023, the company reported significant progress in implementing a new games pricing strategy with nationwide trials. In mid-February 2024, the company introduced tiered point-of-sale pricing adjustments for the Power Card to optimize purchase amounts and chip allocations, considering regional variations across Dave & Buster's stores. The advancements demonstrate proactive management of entertainment pricing while maintaining a compelling value proposition, paving a path for growth in the upcoming periods. The company is optimistic and anticipates the adjustments to boost entertainment sales in the fiscal 2024 substantially.
Digitization: Dave & Buster's digital initiatives are likely to drive growth. The company believes it can drive traffic by enhancing in-store and out-of-store customer experience via digital and mobile strategic initiatives and deploying better technology. In 2023, the company implemented its revamped IT infrastructure across 62 Dave & Buster's stores and plans to complete the rollout across the remainder of the system by 2024 (including the full integration of back office systems). The initiatives pave a path for improved data and analytics, better guest engagement and improved guest satisfaction. The company intends to leverage its growing loyalty database and invest in other mobile applications to build customer connections and drive frequent customer visitation.
Image Source: Zacks Investment Research
In the past three months, Dave & Buster's shares have gained 23.3% compared with the industry’s 1.7% growth.
Concerns
During the fiscal fourth quarter, the company’s comps were negatively impacted by unusual and adverse weather conditions, resulting in multiple complete and partial store closures within the system. During the quarter, pro-forma comparable store sales (including Main Event branded stores) declined 7% year over year. The company anticipates operations to be influenced by calendar adjustments related to the timing of spring breaks. It is cautious of the uncertain macroeconomic environment.
Zacks Rank & Key Picks
Dave & Buster's currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Retail-Wholesale sector include:
The Zacks Consensus Estimate for EAT’s 2024 sales and earnings per share (EPS) indicates 4.9% and 30.7% growth, respectively, from the year-ago period’s levels.
Texas Roadhouse, Inc. (TXRH - Free Report) carries a Zacks Rank #2. It has a trailing four-quarter negative earnings surprise of 3.9%, on average. The stock has gained 34.7% in the past year.
The Zacks Consensus Estimate for TXRH’s 2024 sales and EPS suggests rises of 14.1% and 25.8%, respectively, from the year-ago period’s levels.
Shake Shack Inc. (SHAK - Free Report) carries a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 92.6%, on average. SHAK’s shares have surged 81.3% in the past year.
The Zacks Consensus Estimate for SHAK’s 2024 sales and EPS indicates 14.6% and 91.9% growth, respectively, from the year-ago period’s levels.
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Here's Why Investors Should Retain Dave & Buster's (PLAY) Stock
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) is likely to benefit from store expansions, remodeling efforts and digital initiatives. Also, the emphasis on pricing adjustments bodes well. However, dismal comps and an uncertain macroeconomic environment are a concern.
Let us discuss the factors highlighting why investors should retain the stock now.
Growth Catalysts
Expansion Efforts: Dave & Buster's continues to pursue a disciplined new store-growth strategy in new and existing markets, given the broad appeal of its brand. In the fiscal 2023, the company opened 16 new stores, including 11 Dave & Buster's outlets and five Main Events venues. Following the openings, the company reported solid performances in regard to the same. The company stated an extensive pipeline of new units for opening in the upcoming years. To this end, the company enhanced its strategy for opening new units to better seize immediate demand by utilizing its loyalty database to gather more relevant data about new customers and markets. This optimization is forecasted to improve frequency management and generate greater returns on capital invested in new stores.
Remodeling Initiative: The company emphasizes updating the layout and appearance of its D&B stores to boost foot traffic and overall productivity. It also uses technology to support guest engagement and introduces fresh entertainment options to attract customers for walk-in and particular event business.
Remodels have shown promising financial results in initial tests, particularly in Friendswood, Texas, exceeding expectations. The company has initiated eight test remodels and reported strong feedback with respect to the same. Following the testing and financial observations, the company intends a planned rollout of the remodel program to the remaining D&B locations in 2024 and beyond. It intends to adhere to a stage gate process focused on achieving a 20% or higher return threshold. The company intends to remodel 40 to 45 stores in fiscal 2024.
Sales Building Initiatives: PLAY has been actively exploring and experimenting with pricing adjustments across its gaming ecosystem, gaining valuable insights from various tests conducted in different regions. In the fourth quarter of fiscal 2023, the company reported significant progress in implementing a new games pricing strategy with nationwide trials. In mid-February 2024, the company introduced tiered point-of-sale pricing adjustments for the Power Card to optimize purchase amounts and chip allocations, considering regional variations across Dave & Buster's stores. The advancements demonstrate proactive management of entertainment pricing while maintaining a compelling value proposition, paving a path for growth in the upcoming periods. The company is optimistic and anticipates the adjustments to boost entertainment sales in the fiscal 2024 substantially.
Digitization: Dave & Buster's digital initiatives are likely to drive growth. The company believes it can drive traffic by enhancing in-store and out-of-store customer experience via digital and mobile strategic initiatives and deploying better technology. In 2023, the company implemented its revamped IT infrastructure across 62 Dave & Buster's stores and plans to complete the rollout across the remainder of the system by 2024 (including the full integration of back office systems). The initiatives pave a path for improved data and analytics, better guest engagement and improved guest satisfaction. The company intends to leverage its growing loyalty database and invest in other mobile applications to build customer connections and drive frequent customer visitation.
Image Source: Zacks Investment Research
In the past three months, Dave & Buster's shares have gained 23.3% compared with the industry’s 1.7% growth.
Concerns
During the fiscal fourth quarter, the company’s comps were negatively impacted by unusual and adverse weather conditions, resulting in multiple complete and partial store closures within the system. During the quarter, pro-forma comparable store sales (including Main Event branded stores) declined 7% year over year. The company anticipates operations to be influenced by calendar adjustments related to the timing of spring breaks. It is cautious of the uncertain macroeconomic environment.
Zacks Rank & Key Picks
Dave & Buster's currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Retail-Wholesale sector include:
Brinker International, Inc. (EAT - Free Report) carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 212.7% on average. Shares of EAT have increased 26.3% in the past year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for EAT’s 2024 sales and earnings per share (EPS) indicates 4.9% and 30.7% growth, respectively, from the year-ago period’s levels.
Texas Roadhouse, Inc. (TXRH - Free Report) carries a Zacks Rank #2. It has a trailing four-quarter negative earnings surprise of 3.9%, on average. The stock has gained 34.7% in the past year.
The Zacks Consensus Estimate for TXRH’s 2024 sales and EPS suggests rises of 14.1% and 25.8%, respectively, from the year-ago period’s levels.
Shake Shack Inc. (SHAK - Free Report) carries a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 92.6%, on average. SHAK’s shares have surged 81.3% in the past year.
The Zacks Consensus Estimate for SHAK’s 2024 sales and EPS indicates 14.6% and 91.9% growth, respectively, from the year-ago period’s levels.