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Alberto Abaterusso
Alberto Abaterusso
Articles (1667) 

Dave & Buster's Entertainment Plummets on Lower Comparable Sales

Revenue increases in line with projections, while earnings rise beating expectations

September 11, 2019 | About:

Shares of Dave & Buster's Entertainment Inc. (NASDAQ:PLAY) plummeted 14.23% to $37.50 in after-hours trading on Tuesday following the release of financial results for the second quarter of its fiscal 2019, which ended on Aug. 4.

The market wasn’t pleased with the 1.8% drop in same-store sales due to a 2% decline in Dave & Buster's recorded walk-in sales. In contrast, special events sales rose 0.1%, but it was not enough to offset the decline.

The Dallas-based American restaurant and entertainment company also posted GAAP earnings per share of 90 cents, up 7.1% year-over-year, beating consensus estimates by 6 cents.

Revenue increased 8% year-over-year to approximately $344.6 million, matching projections. By segment, food and beverage jumped 6% to nearly $138 million in revenue, and amusement and other revenues went up 9.4% to $206.7 million.

“We continue to deliver strong revenue and earnings per share growth – including record second quarter sales, EBITDA and EPS – while investing for the future and returning substantial capital to shareholders through dividends and share repurchases,” CEO Brian Jenkins said in a statement.

Moreover, the Ebitda was $79 million in the second quarter of fiscal 2019, up 5.3% from the second quarter of fiscal 2018.

Looking ahead to full fiscal 2019, Dave & Buster's Entertainment Inc. guided for revenue ranging between $1.338 billion and $1.359 billion, compared to $1.37 billion consensus.

In the second quarter of fiscal 2019, the company repurchased 3.4 million shares of its own common stock spending $137 million and paid a 15 cents cash quarterly dividend per common share. Currently, the authorization to repurchase shares is for up to $800 million.

The balance sheet had $23.3 million in cash and cash equivalents, and $552.1 million in total debt as of Aug. 4.

The stock price decreased 23% versus the Nasdaq's 1.4% gain in the past year through Sept. 10. The share price at close on Tuesday was $43.72 for a market capitalization of $1.59 billion. Also, the share price was under the 200- and 100-day simple moving average lines, but still above the 50-day simple moving average line.

The 14-day relative strength index of 63 suggests the stock is neither oversold nor overbought.

The 52-week range is $37.21 to $67.05.

The forward dividend yield is 1.41% versus the industry median of 1.78% as of Sept. 10.

Sell-side analysts in Wall Street issued an overweight recommendation rating for shares of Dave & Buster's Entertainment Inc., with an average target price of $47.

Disclosure: I have no positions in any securities mentioned.

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About the author:

Alberto Abaterusso
If somebody asks what being a value investor means, Alberto Abaterusso would answer, “The value investor is not just the possessor of the security that represents the company, but he is the owner of that company. As an owner of the company the value investor is actively involved in the dynamics of that company and his first concern is how to have sales progressively growing. Also, the value investor is probably one of the most demanding persons in the world concerning sales.”

Abaterusso is a freelance writer based in The Netherlands. He primarily writes about gold, silver and precious metals mining stocks. His articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. Alberto holds an MBA from Università degli Studi di Bari (Italy), Aldo Moro.

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