Dave & Buster (PLAY) Q2 earnings lag estimates, revenue leads

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Dave & Buster’s Entertainment, Inc. PLAY reported mixed results for the second quarter of fiscal 2022, with earnings missing Zacks’ consensus estimate and revenue beating the same. The turnover increased year on year, while the net result decreased year on year.

Following the announcement, the company’s shares fell 2.6% in the September 7 after-hours trading session. The company faced negative investor sentiment, citing a difficult macroeconomic environment, including inflationary pressures on labor and commodities. The company expects the headwinds to persist in the coming quarters.

Profits and income in detail

During the fiscal second quarter, the company reported adjusted earnings per share (EPS) of 61 cents, which missed Zacks’ consensus estimate of $1.01. In the prior year quarter, it reported adjusted EPS of $1.07.

Dave & Buster’s Entertainment, Inc. Price, Consensus, and EPS Surprise

Dave & Buster’s Entertainment, Inc. price-consensus-eps-surprise-chart | Quote from Dave & Buster’s Entertainment, Inc.

Quarterly revenue of $468.4 million topped the consensus mark of $432 million. In the prior year quarter, the company recorded revenue of $377.6 million. Revenue jumped 35.9% from the second quarter of fiscal 2019.

Food and beverage revenue (33.5% of total revenue in the fiscal second quarter) climbed 27.6% year-over-year to $157 million. Entertainment and other revenue (66.5%) increased 22.3% year-over-year to $311.4 million.

Composition details

During the second fiscal quarter, comparable store sales increased 9.6% from the 2019 level. Non-comparable store revenue during the reported quarter was $84.7 million, compared to $69.2 million. million in the prior year quarter.

Operating Highlights

In the fiscal second quarter, operating profit was $56.5 million, compared to $79.2 million in the prior year quarter. The decline was primarily due to higher pre-opening and stock-based compensation expenses as well as transaction costs related to the acquisition of Main Event. The operating margin was 12.1% compared to 21% in the prior year quarter. During the quarter, adjusted EBITDA was $119.6 million, compared to $119.2 million in the prior year quarter.

Balance sheet

As of July 31, 2022, cash and cash equivalents totaled $100.4 million, compared to $139.1 million as of May 1, 2022.

At the end of the second quarter of the fiscal year, net long-term debt totaled $1,219.7 million, compared to $432 million at the end of the first quarter of fiscal 2022.

Fiscal Third Quarter Business Update

In the first five weeks of the third quarter of fiscal 2022, company earnings increased 22.1% from the 2019 level. Same-store walk-in sales increased 24.7 %, while same-store special event sales were down 4.2% in the five-week period compared to 2019.

Zacks ranking and key picks

Dave & Buster’s currently carries a Zacks Rank #3 (Hold). You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some top-ranked stocks in the Zacks Retail-Wholesale sector are Tecnoglass Inc. TGLS, Cracker Barrel Old Country Store, Inc. CBRL and Arcos Dorados Holdings Inc. ARCO.

Tecnoglass sports a No. 1 Zacks rank. The company has a trailing four-quarter earnings surprise of 24.4% on average. Shares of the company are up 7% over the past three months.

Zacks consensus estimate for 2022 Tecnoglass sales and EPS suggests growth of 28.2% and 47.7%, respectively, from prior year period levels.

Cracker Barrel wears a Zacks Rank #2 (Buy). Cracker Barrel is posting long-term earnings growth of 6.9%. Shares of the company are up 14% in the past three months.

Zacks consensus estimate for Cracker Barrel sales and EPS in 2022 suggests growth of 16.3% and 15.4%, respectively, from prior year period levels.

Arcos Dorados carries a Zacks rank of #2. Arcos Dorados has long-term earnings growth of 34.4%. Shares of the company are up 38% over the past year.

Zacks consensus estimate for Arcos Dorados sales and EPS in 2022 suggests growth of 27.1% and 104.2%, respectively, from prior year period levels.

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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.

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