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Dave & Buster's Shares Fall on Q4 Miss, Analyst Reaction Mixed

Published 29/03/2022, 10:26 pm
© Reuters.
PLAY
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Shares of Dave & Busters Entertainment (NASDAQ:PLAY) are down more than 7% in pre-market trading Tuesday after the company reported worse-than-expected Q4 EPS results.

The restaurant & entertainment company reported a fourth-quarter EPS of 52c, compared to the loss per share of $1.19 in the year-ago period and consensus estimates EPS of 61c.

Revenue came in at $343.1 million in the quarter, up from $116.8 million in the year-ago quarter and missing the analyst consensus of $364.6 million. The companys Q4 EBITDA stood at $80.5 million, and adjusted EBITDA was $87.7 million.

Food and beverage revenue was reported at $120.1 million, up from $40.2 million YoY and below the consensus projection of $132.3 million. Amusement and other revenue totaled $223 million in the period, up from $76.6 million in the year-ago quarter and short of the consensus estimates of $235.1 million.

Cost of products was reported at 16%, compared to 17.3% in the year-ago quarter and analyst expectations of 16.7%. Dave & Busters reported a total location count of 142 in the period, down 0.7% QoQ and slightly below the consensus estimates of 144.

The results showed that Q4 comparable store sales were down 2.6% compared to the same quarter in 2019, excluding 14 stores based in areas that had vaccine mandates during the quarter. Total comparable store sales declined 6.8% YoY.

The company saw its comparable sales rise by 5.4% YoY during the first eight weeks of the current Q1, while walk-in comparable store sales are up 9.1% during the same period. Special Event store sales plunged 42% during the first eight weeks from the same period last year.

Truist analyst Jake Bartlett sees a buying opportunity in PLAY shares following the pullback in pre-market trading.

"We view the pull-back in PLAY's stock following 4Q21 results (-8% after hours), as a strong buying opportunity. PLAY's 4Q21 sales missed sharply, due to an outsized impact of Omicron (special events weakness and likely pressure on staffing), but SSS have accelerated since (+5.4% QTD vs. pre-COVID vs. -6.8% in 4Q21). Additionally, 4Q21 store-level margins were stronger than expected, despite the revenue miss, suggesting that cost savings found during COVID are sustainable and highlighting PLAY's relatively low exposure to operating cost inflation," Bartlett said in a client note.

Stifel analyst Chris O'Cull reflected more negatively on the Hold-rated PLAY after a disappointing earnings report.

"PLAY reported disappointing sales ($343M vs. Street $365M) and earnings ($0.52, Street $0.61). We believe the sell-side comp mean is less indicative of what was embedded in revenue estimates because it appears many estimates used an average weekly sales base (i.e., 4Q20) that was too high," O'Cull wrote in a report.

By Senad Karaahmetovic

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