A month has gone by since the last earnings report for Dave & Buster's Entertainment, Inc. PLAY. Shares have lost about 10.3% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Dave & Buster's Q1 Earnings, Revenues Top Estimates
Dave & Buster's posted better-than-expected results in first-quarter fiscal 2017 wherein both the bottom and top line beat the Zacks Consensus Estimate.
However, a decelerating comps growth rate is a cause of concern.
Earnings & Revenues
Dave & Buster's adjusted earnings of $0.87 per share in the fiscal first quarter beat the Zacks Consensus Estimate of $0.81 by 7.4%. Earnings also increased 20.8% from the year-ago figure of $0.72 on higher revenues.
The company reported revenues of $304.1 million in the quarter, surpassing the Zacks Consensus Estimate of $299.6 million by 1.5%. Moreover, revenues improved 16.1% year over year primarily owing to consistent unit expansion.
Turning to category sales, during the quarter, Food and Beverage revenues went up 10.8% year over year to $129.8 million, while Amusement and Other revenues rose 20.3% to $174.3 million.
Behind the Headline Numbers
Comparable store sales (comps) increased 2.2% year over year in the quarter, driven by a 2.4% rise in walk-in sales and a 0.6% improvement in special events sales. However, the figure was lower than 3.6% growth recorded in the prior-year quarter as well as last quarter’s 3.2% increase.
Adjusted earnings before interest, taxes, and amortization (EBITDA) rose 25% to $95.6 million. Adjusted EBITDA margins increased 220 bps to 31.4% from 29.2% in the year-ago quarter.
Fiscal 2017 Outlook
Dave & Buster's has increased the lower end of the previous projection and now expects fiscal 2017 revenues in the range of $1.160 billion to $1.170 billion (previously $1.155–$1.170 billion).
Comps are still anticipated to grow in the range of 2% to 3% on a comparable 52-week basis.
The company expects to open 12 new stores in fiscal 2017 (earlier 11 to 12 openings were anticipated).
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been four revisions lower for the current quarter. In the past month, the consensus estimate has shifted downward by 5% due to these changes.