Dave & Buster's (PLAY) Q2 Earnings Top, View Cut Hits Stock

Dave & Buster's Entertainment, Inc.PLAY posted better-than-expected second-quarter fiscal 2017 results wherein both the top and bottom lines surpassed the Zacks Consensus Estimate.

However, the company's shares declined over 6% in afterhours trading on Sep 5, mirroring investor concerns surrounding the company's lowered comparable store sales (comps) guidance for fiscal 2017.

Earnings & Revenues

Dave & Buster's earnings of 71 cents per share in the fiscal second quarter beat the Zacks Consensus Estimate of 5 cents by 29.1%. Also, the bottom line jumped 42% from the year-ago figure of 50 cents on higher revenues. Notably, results in the reported quarter included certain non-recurring items.

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

Dave & Buster's Entertainment, Inc. Price, Consensus and EPS Surprise | Dave & Buster's Entertainment, Inc. Quote

The company reported revenues of $280.8 million in the quarter, just above the Zacks Consensus Estimate of $280.5 million. Meanwhile, the top line improved 14.9% year over year primarily owing to consistent unit expansion.

Turning to category sales, Food and Beverage revenues rose 10.2% year over year to $118.7 million in the reported quarter. Also, Amusement and Other revenues increased 18.6% to $162.1 million.

Behind the Headline Numbers

Comps increased 1.1% year over year in the fiscal second quarter, driven by a 1.1% rise in walk-in sales and 1.6% improvement in special events sales. Though the figure was slightly better than 1% growth recorded in the prior-year quarter, it was below a 2.2% increase in the last quarter.

Moreover, comps came in below the company's expectation, given the continued challenging environment for casual dining.

Earnings before interest, taxes, and amortization (EBITDA) rose 11.5% to $64 million. Meanwhile, EBITDA margins decreased 70 basis points to 22.8% from 23.5% in the year-ago quarter.

Fiscal 2017 Outlook

Dave & Buster's continues to expect fiscal 2017 revenues in the range of $1.160 billion to $1.170 billion.

The company now projects comps to increase in the band of 1% to 2% on a comparable 52-week basis compared with prior expectation of an increase in the range of 2% to 3%.

EBITDA is now anticipated to be between $270 million to $276 million, down from $276 million to $282 million, projected earlier.

In fiscal 2017, the company expects to open 14 new stores (earlier 12 openings were anticipated).

Currently, Dave & Buster's carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Peer Releases

The Cheesecake Factory Inc. CAKE reported second-quarter fiscal 2017 adjusted earnings per share of 78 cents beating the Zacks Consensus Estimate of 76 cents by 2.6%. However, the bottom line remained flat on a year-over-year basis.

In second-quarter fiscal 2017, BJ's Restaurants, Inc. BJRI posted earnings of 49 cents per share that fell short of the Zacks Consensus Estimate of 51 cents by 3.9%. Moreover, the bottom line decreased 12.5% year over year primarily due to increased expenses.

Buffalo Wild Wings, Inc.'s BWLD second-quarter adjusted earnings of 66 cents per share plunged 50.7% year over year and missed the Zacks Consensus Estimate of $1.01 by 34.7%.

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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.

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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