On Tuesday, Dave & Buster’s Entertainment, Inc. (ticker: PLAY) reported another quarter of record profits and double-digit revenue growth. The stock quickly jumped more than 3.5 percent Wednesday as investors focused on the many positives from the first quarter.
Dave & Buster’s reported first-quarter earnings of 87 cents per share on revenue of $304.1 million. Both numbers topped consensus analyst expectations of 81 cents and $299.8 million, respectively.
In addition, the company raised both its income and revenue guidance for the full fiscal year. Dave & Buster’s is now projecting between $107 million and $111 million in net income and between $1.16 billion and $1.17 billion in revenue for the year.
[Read: 5 Top Restaurant Stocks for Dividend Income.]
The company is also planning to use a portion of that income to repurchase shares of stock. Dave & Buster’s bought back 529,000 shares of stock in the first quarter, and the company’s board has authorized $100 million in additional buybacks.
Dave & Buster’s continued to execute its growth strategy in the quarter as well, opening up an additional four locations.
“Our non-comp store base is performing well and we are very pleased with our 2017 store openings,” CEO Steve King says. “Additionally, I’m proud our comparable store sales growth has now exceeded the competitive casual dining benchmark for 20 consecutive quarters.”
Comparable store sales growth of 2.2 percent came up short of consensus estimates, but long-term Dave & Buster’s investors have plenty of reasons for optimism.
“Although we recognize that the slowing two-year comp trend driven by food/beverage may raise investor concerns, amusement same store sales growth was well ahead of our expectations, as were margins, even excluding the $2.5 million benefit from a favorable settlement,” BMO Capital Markets analyst Andrew Strelzik says in an analyst note. “Not only has PLAY exceeded consensus EBITDA every quarter since its IPO, but we also believe there are incremental margin opportunities throughout the income statement.”
[See: 9 Food-Focused ETFs to Feed Your Portfolio.]
BMO maintains an “outperform” rating for Dave & Buster’s and has a $77 price target for the stock.
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Dave & Buster’s Entertainment, Inc. (PLAY) Delivers Another Strong Quarter originally appeared on usnews.com
