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Dave & Buster's (PLAY) Q2 Earnings Top, View Cut Hits Stock

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Dave & Buster's Entertainment, Inc. (PLAY - Free Report) posted better-than-expected second-quarter fiscal 2017 results wherein both the top and bottom lines surpassed the Zacks Consensus Estimate.

However, the company’s shares declined over 6% in afterhours trading on Sep 5, mirroring investor concerns surrounding the company’s lowered comparable store sales (comps) guidance for fiscal 2017.

Earnings & Revenues

Dave & Buster's earnings of 71 cents per share in the fiscal second quarter beat the Zacks Consensus Estimate of 5 cents by 29.1%. Also, the bottom line jumped 42% from the year-ago figure of 50 cents on higher revenues. Notably, results in the reported quarter included certain non-recurring items.

Dave & Buster's Entertainment, Inc. Price, Consensus and EPS Surprise


Dave & Buster's Entertainment, Inc. Price, Consensus and EPS Surprise | Dave & Buster's Entertainment, Inc. Quote

The company reported revenues of $280.8 million in the quarter, just above the Zacks Consensus Estimate of $280.5 million. Meanwhile, the top line improved 14.9% year over year primarily owing to consistent unit expansion.

Turning to category sales, Food and Beverage revenues rose 10.2% year over year to $118.7 million in the reported quarter. Also, Amusement and Other revenues increased 18.6% to $162.1 million.

Behind the Headline Numbers

Comps increased 1.1% year over year in the fiscal second quarter, driven by a 1.1% rise in walk-in sales and 1.6% improvement in special events sales. Though the figure was slightly better than 1% growth recorded in the prior-year quarter, it was below a 2.2% increase in the last quarter.

Moreover, comps came in below the company’s expectation, given the continued challenging environment for casual dining.

Earnings before interest, taxes, and amortization (EBITDA) rose 11.5% to $64 million. Meanwhile, EBITDA margins decreased 70 basis points to 22.8% from 23.5% in the year-ago quarter.

Fiscal 2017 Outlook

Dave & Buster's continues to expect fiscal 2017 revenues in the range of $1.160 billion to $1.170 billion.

The company now projects comps to increase in the band of 1% to 2% on a comparable 52-week basis compared with prior expectation of an increase in the range of 2% to 3%.

EBITDA is now anticipated to be between $270 million to $276 million, down from $276 million to $282 million, projected earlier.

In fiscal 2017, the company expects to open 14 new stores (earlier 12 openings were anticipated).

Currently, Dave & Buster's carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Peer Releases

The Cheesecake Factory Inc. (CAKE - Free Report) reported second-quarter fiscal 2017 adjusted earnings per share of 78 cents beating the Zacks Consensus Estimate of 76 cents by 2.6%. However, the bottom line remained flat on a year-over-year basis.

In second-quarter fiscal 2017, BJ’s Restaurants, Inc. (BJRI - Free Report) posted earnings of 49 cents per share that fell short of the Zacks Consensus Estimate of 51 cents by 3.9%. Moreover, the bottom line decreased 12.5% year over year primarily due to increased expenses.

Buffalo Wild Wings, Inc.’s second-quarter adjusted earnings of 66 cents per share plunged 50.7% year over year and missed the Zacks Consensus Estimate of $1.01 by 34.7%.

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