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Category: Stock Market and Dave & Busters
Date: 11 September 2019 Stock Price: $43.72 We take a look at the 2nd quarter earnings release of their 2019 fiscal year of Dave & Buster a leading operator of high-volume entertainment venues combining entertainment and dining for adults and families alike.
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About Dave & Busters
Dave & Buster's is the leading owner and operator of high-volume venues that combine entertainment and dining in North America for both adults and families. Founded in 1982, the core of the concept is to offer guests the opportunity to “Eat Drink Play Watch®” all in one location. We offer a full menu of "Fun American New Gourmet" entrées and appetizers, a full selection of non-alcoholic and alcoholic beverages, and an extensive assortment of entertainment attractions centered around playing games and watching live sports and other televised events.
Financial overview of Dave & Busters' latest earnings report
The numbers we are interested in (for the quarter):
- Net sales $344.599 million (up from $319.188 million from the same quarter of the previous year)
- Cost of sales: $298.385 million (up from $273.258 million for the same quarter of the previous year)
- Net income: $32.356 million (down from $33.779 million for the same quarter of the previous year)
- Diluted earnings per share: $0.9 (up from $0.84 for the same quarter of the previous year)
- PE ratio: 12.14 (based on the earnings per share for the current quarter being reported for full fiscal year)
- Diluted weighted-average shares outstanding: 36.015 million (down from 40.280 million for the same quarter of the previous year)
- Dividend declared: $0.15
- Dividend yield: 1.37%
- Dividend yield: 1.37%
- Cash and cash equivalents: $23.318 million
- Cash and cash equivalents per share: $0.64
- Cash and cash equivalents makes up 1.48% of Dave & Busters' market capital
- Cash and cash equivalents makes up 10.04% of Dave & Busters' total assets
- Total shareholders' equity of Dave & Busters': $249.302 million
- Shareholders' equity per share: $6.92
- So Dave & Busters' is trading at 6.32 times the stockholders equity per share
Dave & Busters' management commentary on the results and earnings guidance
DALLAS, Sept. 10, 2019 (GLOBE NEWSWIRE) -- Dave & Buster's Entertainment, Inc., (NASDAQ:PLAY), ("Dave & Buster's" or "the Company"), an owner and operator of entertainment and dining venues, today announced financial results for its second quarter 2019, which ended on August 4, 2019
“We continue to deliver strong revenue and earnings per share growth – including record second quarter sales, EBITDA and EPS – while investing for the future and returning substantial capital to shareholders through dividends and share repurchases,” said Brian Jenkins, Chief Executive Officer. “We are executing on five near-term priorities to improve performance and capitalize on the growing consumer demand for our offerings. By realizing operational efficiencies and cost savings, we will fund investments to fuel comp sales growth going forward. We are acting decisively to accelerate near and long-term value creation, and to deliver superior returns for all Dave & Buster’s shareholders.”
Near-Term Priorities
The Company is focused on five priorities to drive near and long-term value creation:
Development
The Company remains on track to open 15 to 16 new locations in fiscal 2019, representing unit growth of approximately 12% (net of Gwinnett (Duluth), Georgia closing). At the top end of the range, these store openings will include 11 large and 5 small format locations and will skew towards new markets for the Dave & Buster’s brand.
During the second quarter of 2019, the Company opened three new stores located in Winston-Salem, North Carolina; Natick, Massachusetts (west of Boston); and Gaithersburg, Maryland (northwest of Washington, D.C.). During the third quarter, the Company has already opened a store in Huntsville, Alabama and Concord, California. Two more stores in McDonough, Georgia and Wichita, Kansas are scheduled to open later in the fiscal third quarter. As of September 4, 2019, there were six stores under construction.
Capital Allocation Initiatives
During the second quarter of 2019, the Company repurchased 3.4 million shares for approximately $137 million and at quarter-end had approximately $270 million remaining under the $800 million authorization. The Company paid a quarterly cash dividend of $0.15 per share during the second quarter.
Financial Outlook
In light of the competitive environment, and because the initiatives underway will take time to execute and drive results, the Company is setting new guidance for fiscal 2019, which ends February 2, 2020:
“We continue to deliver strong revenue and earnings per share growth – including record second quarter sales, EBITDA and EPS – while investing for the future and returning substantial capital to shareholders through dividends and share repurchases,” said Brian Jenkins, Chief Executive Officer. “We are executing on five near-term priorities to improve performance and capitalize on the growing consumer demand for our offerings. By realizing operational efficiencies and cost savings, we will fund investments to fuel comp sales growth going forward. We are acting decisively to accelerate near and long-term value creation, and to deliver superior returns for all Dave & Buster’s shareholders.”
Near-Term Priorities
The Company is focused on five priorities to drive near and long-term value creation:
- Revitalization of existing stores beginning with the installation of “Wow Walls,” LED television displays that create high-energy, contemporary, sports and entertainment-oriented dining areas. This cutting-edge visual technology will be initially deployed across 35 stores by mid-October to drive greater traffic and food and beverage penetration. The Company’s revitalization also includes continued food, beverage and amusements innovation, including the upcoming launch of Terminator VR, all of which is part of introducing new “wow” experiences for guests.
- Building deeper guest engagement starting with the nation-wide launch of the Dave & Buster’s mobile app in October. This will be coupled with technology upgrades, enhanced data analytics and digital marketing investments to drive deeper engagement with customers.
- Disciplined cost management to fuel growth investments. The Company has identified approximately $15 million of gross annualized cost savings, most of which will be redeployed towards guest engagement initiatives to fuel comp sales growth.
- Investment in highest-return new store locations to strengthen the Dave & Buster’s brand and portfolio over the long term. This includes optimizing store formats to match market sales potential and managing the pace of new store openings to maximize returns and advance the Company’s store revitalization efforts.
- Continued capital return to shareholders in the form of share repurchases and dividend payments. The Company has returned more than $200 million to shareholders through the end of the second quarter of 2019.
Development
The Company remains on track to open 15 to 16 new locations in fiscal 2019, representing unit growth of approximately 12% (net of Gwinnett (Duluth), Georgia closing). At the top end of the range, these store openings will include 11 large and 5 small format locations and will skew towards new markets for the Dave & Buster’s brand.
During the second quarter of 2019, the Company opened three new stores located in Winston-Salem, North Carolina; Natick, Massachusetts (west of Boston); and Gaithersburg, Maryland (northwest of Washington, D.C.). During the third quarter, the Company has already opened a store in Huntsville, Alabama and Concord, California. Two more stores in McDonough, Georgia and Wichita, Kansas are scheduled to open later in the fiscal third quarter. As of September 4, 2019, there were six stores under construction.
Capital Allocation Initiatives
During the second quarter of 2019, the Company repurchased 3.4 million shares for approximately $137 million and at quarter-end had approximately $270 million remaining under the $800 million authorization. The Company paid a quarterly cash dividend of $0.15 per share during the second quarter.
Financial Outlook
In light of the competitive environment, and because the initiatives underway will take time to execute and drive results, the Company is setting new guidance for fiscal 2019, which ends February 2, 2020:
- Total revenues of $1.338 billion to $1.359 billion (vs. $1.365 billion to $1.390 billion)
- Comparable store sales of -3.5% to -2.0% (vs. -1.5% to +0.5%)
- 15 to 16 new stores (unchanged)
- Net income of $91 million to $100 million (vs. $103 million to $113 million)
- Effective tax rate of 22.0% to 22.5% (unchanged) and diluted share count of approximately 34.0 million (vs. 36.5 million shares)
- EBITDA of $272 million to $282 million ($274 million to $284 million excluding approximately $2 million in one-time charges) (vs. $283 million to $295 million previously)
- Total capital additions (net of tenant improvement allowances and other landlord payments) of $200 million to $210 million (vs. $190 million to $200 million)
Dave & Busters (NASDAQ: PLAY) stock price history
The image below, obtained from Google shows the stock price history of Dave & Busters over the last 5 years. And its been a good time for stockholders as the stock was trading at around $17.30, 5 years ago and its currently sitting at $43.72. That's a return of 152% over the last 5 years. However it is not all good news for Dave & Busters stockholders
The image below, also obtained from Google shows the stock price performance of Dave & Busters over the last trading day including after market activity on the stock. And as it shows there has been a significantly decline in the stock in after market trading following the release of the group's latest earnings numbers
Recent coverage of Dave & Busters
Below an extract of an article covering Dave & Busters obtained from Zacks.
Dave & Buster's (PLAY - Free Report) came out with quarterly earnings of $0.90 per share, beating the Zacks Consensus Estimate of $0.86 per share. This compares to earnings of $0.84 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 4.65%. A quarter ago, it was expected that this owner of Dave & Buster's, a chain of restaurants and arcades would post earnings of $1.14 per share when it actually produced earnings of $1.13, delivering a surprise of -0.88%.
Over the last four quarters, the company has surpassed consensus EPS estimates three times. Dave & Buster's, which belongs to the Zacks Retail - Restaurants industry, posted revenues of $344.60 million for the quarter ended July 2019, missing the Zacks Consensus Estimate by 0.19%. This compares to year-ago revenues of $319.19 million. The company has topped consensus revenue estimates two times over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Dave & Buster's shares have lost about 4.6% since the beginning of the year versus the S&P 500's gain of 18.8%.
The full original article can be found here
Dave & Buster's (PLAY - Free Report) came out with quarterly earnings of $0.90 per share, beating the Zacks Consensus Estimate of $0.86 per share. This compares to earnings of $0.84 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 4.65%. A quarter ago, it was expected that this owner of Dave & Buster's, a chain of restaurants and arcades would post earnings of $1.14 per share when it actually produced earnings of $1.13, delivering a surprise of -0.88%.
Over the last four quarters, the company has surpassed consensus EPS estimates three times. Dave & Buster's, which belongs to the Zacks Retail - Restaurants industry, posted revenues of $344.60 million for the quarter ended July 2019, missing the Zacks Consensus Estimate by 0.19%. This compares to year-ago revenues of $319.19 million. The company has topped consensus revenue estimates two times over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Dave & Buster's shares have lost about 4.6% since the beginning of the year versus the S&P 500's gain of 18.8%.
The full original article can be found here
Dave & Busters (NASDAQ: PLAY) latest stock valuation
So was the market warranted in punishing Dave & Busters in after market trade following the release of their results? Well based on Dave & Busters earnings report and their fiscal guidance provided our valuation models have a target price on Dave & Busters of $43.90. So we believe the price it was trading at before the close of the markets accurately reflected the firms latest financial results and it was actually fully priced around those levels. We therefore believe the reaction in aftermarket trade was a knee jerk reaction to the group lowering their earnings forecast by about $3 million from their previous guidance provided. We expect the stock price of Dave & Busters (NASDAQ:PLAY) to recover to levels closer to our target price of $43.90