A month has gone by since the last earnings report for Dave & Buster's (PLAY). Shares have lost about 0.1% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Dave & Buster's due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Dave & Buster's Q3 Earnings & Revenues Miss Estimates
Dave & Buster's Entertainment reported tepid third-quarter fiscal 2024 results, with earnings and revenues missing their respective Zacks Consensus Estimate. Both metrics declined on a year-over-year basis.
The company's third-quarter performance (traditionally its lowest seasonal volume period) faced challenges compared to the previous year due to a fiscal calendar mismatch, unfavorable weather in key regions, disruptions from remodel construction at certain locations and unusual items that influenced prior-year comparability.
PLAY’s Q3 Earnings & Revenues
For the fiscal third quarter, the company reported an adjusted loss per share of 45 cents, wider than the Zacks Consensus Estimate of a loss of 42 cents. In the year-ago quarter, it reported an adjusted earnings per share (EPS) of 1 cent.
Quarterly revenues of $453 million missed the consensus mark of $460 million. The top line declined 3% from $466.9 million reported in the prior-year quarter.
Food and Beverage revenues (35% of total revenues in the reported quarter) declined 3.9% year over year to $158.4 million. Entertainment revenues (65%) fell 2.5% year over year to $294.6 million.
Comps Details
During the quarter under discussion, comparable store sales (including Main Event branded stores) declined 7.7% year over year.
Operating Highlights
During the fiscal third quarter, operating income amounted to $6.3 million compared with $18.6 million in the prior-year quarter. The operating margin was 1.4% compared with 4% in the year-ago quarter. Our estimate for the metric was 0.4%.
Adjusted EBITDA during the quarter came in at $68.3 million compared with $81.6 million reported in the year-earlier quarter. Our estimate for the metric was $58.6 million.
Balance Sheet
As of Nov. 5, 2024, cash and cash equivalents were $8.6 million compared with $37.3 million as of Feb. 4, 2024.
At the fiscal third-quarter end, net long-term debt totaled approximately $1.44 billion compared with $1.28 billion as of Feb. 4, 2024.
Other Updates
During the fiscal third quarter, Dave & Buster’s achieved notable progress in advancing its long-term strategic goals. The company opened three new locations, including two Dave & Buster’s stores in Barboursville, WV, and Lombard, IL, along with a new Main Event store in Grand Rapids, MI. Following the quarter’s end, the company opened a Dave & Buster’s location in Clarksville, TN.
The company completed 11 fully programmed remodels and reported strong performance regarding the same. It plans to remodel 44 stores by the end of fiscal 2024.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -8.64% due to these changes.
VGM Scores
At this time, Dave & Buster's has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Dave & Buster's has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Dave & Buster's Entertainment, Inc. (PLAY) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
