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Is Dave & Buster's (PLAY) Set to Beat Q1 Earnings Estimates?

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Shares of Dave & Buster's (PLAY - Free Report) climbed over 2.3% through late afternoon trading on Friday in a sign that investors might be expecting strong first-quarter results from the restaurant and arcade chain when it reports after the closing bell on Monday. Let’s take a look to see if they should be so confident.

Dave & Buster's has seen its stock price climb over 12% during the last four weeks, prior to Friday’s surge. Yet, shares of PLAY are still down roughly 35% over the last year. The company closed at $47.56 per share on Thursday, down over 30% from its 52-week high of $71.50 per share.

With that said, shares of Dave & Buster's could continue their month-long charge if the company reports solid Q1 financial results.

Q1 Outlook

Dave & Buster's is projected to report quarterly revenues of $322.27 million, based on our current Zacks Consensus Estimates. This would mark a nearly 6% climb from the year-ago period when the company posted quarterly revenues of $304.15 million.

At the other, sometimes more important end of the income statement, Dave & Buster's adjusted quarterly earnings are expected to pop by 6.9% to touch $0.93 per share. Still, investors also need to understand what chance Dave & Buster's has to top our earnings estimate, as this could help its stock price keep on moving upward, while a miss could lead to a decline—at least in the near-term.  

Luckily, Zacks Premium customers can utilize the Earnings ESP Screener in order to search for stocks that are expected to surprise, either way. This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.

A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.

In contrast, a stock with a Zacks Rank #3 (Hold) or worse, coupled with a negative Earnings ESP, is one that we typically want to avoid during earnings season.

Dave & Buster's is currently a Zacks Rank #3 (Hold) and sports an Earnings ESP of -0.36%. Therefore, investors can consider PLAY a stock that could fall short of quarterly earnings estimates when it reports its Q1 financial results after market close on Monday. 

However, investors should note that Dave & Buster's has topped quarterly earnings estimates every quarter since the restaurant and arcade chain went public back in 2014.

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