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5 Reasons Why Dave & Buster's (PLAY) Stock is Worth Buying
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Based in Texas, Dave & Buster's Entertainment, Inc. (PLAY - Free Report) began trading in Oct 2014. 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.
Stellar Stock Price Movement & Solid ROE: Since the launch of its IPO, shares of the company have gained a mammoth 301.8%, significantly outpacing the Zacks categorized Retail-Restaurants industry’s gain of nearly 32% over the same time frame. Given management’s insistent focus on improving its amusement offerings, the stock should keep performing well in the quarters ahead.
Dave & Buster's delivered return on equity (ROE) of 20.10% in the trailing 12 months compared with the industry’s gain of 8.15%. This indicates that the company reinvests more efficiently compared with its peers and supports its growth potential.
A Distinct Business Style: The company continues to perform well on the back of the unique customizable experience that it offers across its four platforms, “Eat Drink Play and Watch”.
We note that apart from great food or beverages, the company’s entertainment business has been driving growth. In fact, in the latest reported quarter, amusement and other revenues accounted for nearly 56% of the company’s total revenues, and is thus one of the major reasons for its success over competitors.
This is because increased dependence on gaming has provided the company with some protection from the pressures facing the broader restaurant industry of late. This, in turn, is driving market share gains and boosting comps growth. Also, augmented focus on amusement is propelling Dave & Buster’s earnings as it is a higher-margin business.
It is in fact this unique model that sets it apart and we expect the company’s entertainment business to carry the growth story forward.
Earnings & Revenue Growth: Arguably, nothing is more important than earnings growth as surging profit levels are often an indication of strong prospects (and stock price gains) for the company in question.
While Dave & Buster’s has a historical EPS (earnings per share) growth rate of 25.6%, compared with the industry average of 7.9%, investors should really focus on its projected growth. Here, the company is looking to grow at a rate of 22.9%, thoroughly crushing the industry average, which calls for EPS growth of just 7.5%.
Propelling the earnings forward is the company’s solid revenue growth story. It should be noted that the projected sales growth for the current year is 16.6%, much higher than the broader industry’s estimate of 3%.
Growth Scope & Initiatives: Dave & Buster’s consistent efforts to build sales and improve margins through various initiatives bode well. In this regard, continual opening of stores, menu innovation, launch of new games and the new Fun American New Gourmet and beverage options should help the company boost its top and bottom line, going ahead.
Particularly, Dave & Buster's continues to pursue a disciplined new store growth strategy in both new and existing markets, given the broad appeal of its brand. To this end, in fiscal 2017 (ending Feb 4, 2018), the company intends to open a total of 12 new stores across the small and large store formats. In fact, management believes it can grow the concept to over 200 units in North America over time.
We expect the company’s continuous expansion plans to add immensely to the top line and boost its overall performance as well.
Earnings History and Estimate Revisions: Dave & Buster’s has exceeded earnings expectations in each of the ten quarters it has reported so far and has an average positive earnings surprise of 34.15% for the trailing four quarters.
Moreover, the Zacks Consensus Estimate for Dave & Buster’s current year’s earnings has moved up 7.1%, reflecting six upward revisions versus none downward, over the last 60 days. Also, next year’s earnings estimates have inched up 4.1%, on the back of six upward revisions versus no downward revision. All these positive earnings estimate revisions testifies the unwavering confidence that analysts have in the company and also adds to the optimism in the stock.
Our Take
So far, Dave & Buster’s has had a phenomenal run. Despite stiff competition from the likes of Darden Restaurants, Inc. (DRI - Free Report) , BJ's Restaurants, Inc. (BJRI - Free Report) and Red Robin Gourmet Burgers Inc. (RRGB - Free Report) , it has been doing pretty well.
Although the company is certainly not immune to the macroeconomic environment, we expect it to sustain the momentum going forward on the back of a unique business style and various sales-building initiatives.
Zacks' 2017 IPO Watch List
Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.
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5 Reasons Why Dave & Buster's (PLAY) Stock is Worth Buying
Based in Texas, Dave & Buster's Entertainment, Inc. (PLAY - Free Report) began trading in Oct 2014. 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.
This Zacks Rank #2 (Buy) company continues to show promise in several areas that makes it an attractive investment option. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Why is Dave & Buster's a Solid Choice?
Stellar Stock Price Movement & Solid ROE: Since the launch of its IPO, shares of the company have gained a mammoth 301.8%, significantly outpacing the Zacks categorized Retail-Restaurants industry’s gain of nearly 32% over the same time frame. Given management’s insistent focus on improving its amusement offerings, the stock should keep performing well in the quarters ahead.
Dave & Buster's delivered return on equity (ROE) of 20.10% in the trailing 12 months compared with the industry’s gain of 8.15%. This indicates that the company reinvests more efficiently compared with its peers and supports its growth potential.
A Distinct Business Style: The company continues to perform well on the back of the unique customizable experience that it offers across its four platforms, “Eat Drink Play and Watch”.
We note that apart from great food or beverages, the company’s entertainment business has been driving growth. In fact, in the latest reported quarter, amusement and other revenues accounted for nearly 56% of the company’s total revenues, and is thus one of the major reasons for its success over competitors.
This is because increased dependence on gaming has provided the company with some protection from the pressures facing the broader restaurant industry of late. This, in turn, is driving market share gains and boosting comps growth. Also, augmented focus on amusement is propelling Dave & Buster’s earnings as it is a higher-margin business.
It is in fact this unique model that sets it apart and we expect the company’s entertainment business to carry the growth story forward.
Earnings & Revenue Growth: Arguably, nothing is more important than earnings growth as surging profit levels are often an indication of strong prospects (and stock price gains) for the company in question.
While Dave & Buster’s has a historical EPS (earnings per share) growth rate of 25.6%, compared with the industry average of 7.9%, investors should really focus on its projected growth. Here, the company is looking to grow at a rate of 22.9%, thoroughly crushing the industry average, which calls for EPS growth of just 7.5%.
Propelling the earnings forward is the company’s solid revenue growth story. It should be noted that the projected sales growth for the current year is 16.6%, much higher than the broader industry’s estimate of 3%.
Growth Scope & Initiatives: Dave & Buster’s consistent efforts to build sales and improve margins through various initiatives bode well. In this regard, continual opening of stores, menu innovation, launch of new games and the new Fun American New Gourmet and beverage options should help the company boost its top and bottom line, going ahead.
Particularly, Dave & Buster's continues to pursue a disciplined new store growth strategy in both new and existing markets, given the broad appeal of its brand. To this end, in fiscal 2017 (ending Feb 4, 2018), the company intends to open a total of 12 new stores across the small and large store formats. In fact, management believes it can grow the concept to over 200 units in North America over time.
We expect the company’s continuous expansion plans to add immensely to the top line and boost its overall performance as well.
Earnings History and Estimate Revisions: Dave & Buster’s has exceeded earnings expectations in each of the ten quarters it has reported so far and has an average positive earnings surprise of 34.15% for the trailing four quarters.
Moreover, the Zacks Consensus Estimate for Dave & Buster’s current year’s earnings has moved up 7.1%, reflecting six upward revisions versus none downward, over the last 60 days. Also, next year’s earnings estimates have inched up 4.1%, on the back of six upward revisions versus no downward revision. All these positive earnings estimate revisions testifies the unwavering confidence that analysts have in the company and also adds to the optimism in the stock.
Our Take
So far, Dave & Buster’s has had a phenomenal run. Despite stiff competition from the likes of Darden Restaurants, Inc. (DRI - Free Report) , BJ's Restaurants, Inc. (BJRI - Free Report) and Red Robin Gourmet Burgers Inc. (RRGB - Free Report) , it has been doing pretty well.
Although the company is certainly not immune to the macroeconomic environment, we expect it to sustain the momentum going forward on the back of a unique business style and various sales-building initiatives.
Zacks' 2017 IPO Watch List
Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.
One has driven from 0 to a $68 billion valuation in 8 years. Four others are a little less obvious but already show jaw-dropping growth. Download this IPO Watch List today for free >>