Can Dave & Buster's Stock Bounce Back After Last Week's 12% Drop?
Dave & Buster's Entertainment (NASDAQ: PLAY) has been a rare winner in casual dining, but that wasn't the case last week. Shares of the "eatertainment" chain tumbled 11.9% last week, after the company offered up uninspiring guidance in Tuesday's earnings announcement.
Revenue climbed 15% to $280.8 million for the fiscal second quarter, more on the strength of opening new locations than a pedestrian 1.1% uptick in comparable-store sales. The bottom line grew even faster, as adjusted earnings per share rose from $0.50 to $0.59. Analysts were holding out for a profit of just $0.57 a share but on a more robust $282 million in revenue. Dave & Buster's has now exceeded Wall Street's profit targets in each of its first 12 quarters as a public company.
A mixed quarter isn't fatal, but Dave & Buster's sealed its fate when it adjusted its full-year guidance. It's sticking to its earlier target of $1.16 billion to $1.17 billion in revenue, but that's a combination of opening two more locations this year -- as it opens 14 new stores in fiscal 2017 instead of a dozen -- and lowering its comps forecast to a full-year forecast of 1% to 2% growth instead of a 2% to 3% uptick. Dave & Buster's net income guidance is now inching higher, but EBITDA is going the other way, given higher pre-opening costs and a litigation settlement. Mixed guidance when paired up with a mixed quarter is enough to deal a blow to a market darling of a growth stock.
Source: Fool.com
