Dave & Buster’s: Zacks’ Bear of the Day Play

The earnings outlook for Dave & Busters Entertainment (PLAYSnapshot Report) was looking tasty a few months ago and investors capitalized as the stock rallied over 60% from $21 to $34 since mid-December.

Headquartered in Dallas, Texas, the brand owns and operates over 70 large restaurants that combine full-service dining and entertainment options that allow guests to “Eat, Play, Drink, and Watch” all under one roof.

The company’s sales mix, which splits evenly between (1) food and beverage and (2) amusement and games, generates above-average store-level profitability relative to casual dining peers. This is driven by its high margin amusement business which naturally has both lower cost-of-goods and labor requirements.

But earnings estimates actually came down in the last 60 days after their last earnings report as you can see in the Zacks Detailed EPS tables below (data as of 5/15)…

The growth rates still look prime for this fun eatery, but we need to see these estimates stop going down and start heading back up to restore our confidence in the projections.

Kevin Cook is a Senior Stock Strategist for Zacks where he runs the Follow The Money portfolio.


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