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Dave & Buster's (PLAY) Q3 Earnings Beat Estimates, Stock Up

By Zacks Investment ResearchStock MarketsDec 08, 2021 07:29AM ET
www.investing.com/analysis/dave--busters-play-q3-earnings-beat-estimates-stock-up-200610887
Dave & Buster's (PLAY) Q3 Earnings Beat Estimates, Stock Up
By Zacks Investment Research   |  Dec 08, 2021 07:29AM ET
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Dave & Buster's Entertainment, Inc. PLAY reported mixed third-quarter fiscal 2021 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. The bottom line beat the consensus mark for the sixth straight quarter, while the top line lagged the same after beating in the preceding three quarters. However, both the metrics improved year over year. Following the announcement, shares of the company increased nearly 4% in the after-hour trading session on Dec 7.

Dave & Buster’s interim CEO, Kevin Sheehan, said “We have begun a new phase of innovation, growth and value creation with a focus on realizing the Company’s significant upside potential. I am excited about the future and look forward to sharing our progress with all of our stakeholders.”

Going forward, the company expects the momentum to continue on the back of its strategic initiatives that include new menu, optimized marketing and technology investments.

Earnings & Revenues in Detail

During the fiscal third quarter, the company reported adjusted earnings per share of 21 cents, which outpaced the Zacks Consensus Estimate of 12 cents. In the year-ago quarter, it had reported an adjusted loss per share of $1.01.

Quarterly revenues of $318 million lagged the consensus mark of $320 million. In the prior-year quarter, the company reported revenues of $109.1 million. Revenues increased 6.2% compared with third-quarter fiscal 2019. As a result, Amusements and Other as well as Food and Beverage revenues rose significantly.

Food and Beverage revenues (33.9% of total revenues in the fiscal third quarter) soared 181% year over year to $107.7 million. Amusement and Other revenues (66.1%) surged a whopping 197.3% year over year to $210.2 million.

Comps Details

During the fiscal third quarter, comparable store sales increased 1.1% (excluding seven stores located in markets that had vaccine mandates during the quarter) compared with the 2019 level. Including all stores, comparable store sales dipped 0.4% compared with the 2019 level. Meanwhile, non-comparable store revenues in the reported quarter were $55.4 million, up from $20.1 million in the year-ago quarter.

Operating Highlights

During the fiscal third quarter, operating income amounted to $24.5 million against an operating loss of $56 million in the prior-year quarter. Operating margin was 7.7% against (51.4%) reported in the prior-year quarter. During the quarter, adjusted EBITDA was $68.2 million, up 47.4% year over year.

Balance Sheet

As of Oct 31, 2021, cash and cash equivalents totaled $27 million compared with $11.9 million as of Jan 31, 2021.

At the end of the fiscal third quarter, net long-term debt totaled $484.7 million compared with $596.4 million at the end of Jan 31, 2021.

Fiscal Q4 Business Update & Outlook

During the first five weeks of fourth-quarter fiscal 2021, the company reported witnessed sustained recovery in business with comps increasing 3.5% from the 2019 level. Walk-in comparable store sales rose 14%, while Special Event comparable store sales slumped 59% for the five-week period compared with 2019. The company stated that fourth-quarter revenues will be negatively impacted by the weak Special Events business relative to 2019 and from a calendar shift in its major holiday periods.

The company expects third-quarter comparable store sales to be marginally positive compared with fourth-quarter 2019. It anticipates fiscal fourth-quarter EBITDA margin to increase by 200 basis points compared with fourth-quarter 2019.

For fiscal 2021, the company anticipates capital additions (net of tenant allowances) of $100 million.

Dave & Buster's carries a Zacks Rank #3 (Hold).

Peer Releases

Papa John’s International, Inc. PZZA reported robust third-quarter fiscal 2021 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. During the fiscal third quarter, the company reported adjusted earnings of 83 cents per share, which surpassed the Zacks Consensus Estimate of 69 cents by 20.3%. The bottom line improved 137.1% from 35 cents in the prior-year quarter. Quarterly revenues of $512.8 million beat the consensus mark of $501 million by 2.3%. The top line increased 8.4% on a year-over-year basis.

Papa John’s has been benefiting from solid comparable sales in North America, driven by strong customer retention and innovation strategies. PZZA witnessed a rise in company-owned restaurant revenues, franchise royalties and commissary sales. International revenues gained from higher franchise royalties and unit growth. This Zacks Rank #2 (Buy) company’s shares have gained 42% in the past six months compared with the industry’s growth of 2.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Cheesecake Factory (NASDAQ:CAKE) Incorporated CAKE reported third-quarter fiscal 2021 results, wherein both earnings and revenues missed the Zacks Consensus Estimate. In the quarter under review, adjusted earnings per share (EPS) was 65 cents, which lagged the Zacks Consensus Estimate of 70 cents. In the prior-year quarter, the company had reported an adjusted loss of 33 cents per share. This was primarily due to rise in labor and other operating expenses.

Cheesecake Factory gained from a solid off-premise sales growth. Quarter-to-date (through Nov 2), the off-premise model contributed 28% to total sales. Shares of the company have declined 32.4% in the past six months, against the industry’s growth of 0.9%. Cheesecake Factory carries a Zacks Rank #3 (Hold).

YUM! Brands, Inc. YUM reported strong third-quarter 2021 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. Both the metrics improved year over year. During third-quarter 2021, the company’s adjusted earnings of $1.22 beat the Zacks Consensus Estimate of $1.06. In the prior-year quarter, the company had reported adjusted earnings of $1.01. Quarterly revenues of $1,606 million outpaced the consensus mark of $1,584 million. The top line improved 11% year over year.

YUM! Brands’ results benefited from strong digital sales, robust unit development and a diversified global business model. The company strengthened its digital capabilities with the acquisition of Dragontail, which provides AI-based integrated kitchen order management and delivery technologies. The initiative paves the path for strengthening store operations and enhancing customer experience. During the third quarter, it reported digital sales of more than $5 billion. Shares of this Zacks Rank #3 company have gained 6.8% in the past six months.


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Dave & Buster's (PLAY) Q3 Earnings Beat Estimates, Stock Up
 

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Dave & Buster's (PLAY) Q3 Earnings Beat Estimates, Stock Up

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