Shares of Dave & Buster’s Entertainment (PLAY) surged in after-hours trading after the restaurant chain reported second-quarter financial results that beat Wall Street forecasts. Earnings per share (EPS) came in at $1.12, which beat analysts’ consensus estimate of $0.84.
In addition, sales increased by 2.8% year-over-year, with revenue hitting $557.1 million. That missed analysts’ expectations by $10.23 million. At one point, shares of Dave & Buster’s were up as much as 9% in after-hours trading on news of the earnings beat.
Accelerating Stock Buybacks
Beyond the top and bottom lines, Dave & Buster’s reported that its comparable store sales decreased 6.3% from a year earlier. However, the company’s profit margin grew to 27.2% from 25.9% a year ago. The company also bought back $47.4 million worth of its own stock during the quarter, bringing total repurchases this year to $60 million. As a result, Dave & Buster’s had $13.1 million of cash on hand at the end of the quarter.
In addition, management said they opened two new restaurants during the quarter and remodeled nine existing locations among the company’s more than 150 outlets.
Guidance for Q3 2024
Dave & Buster’s did not provide any forward guidance in its earnings release. However, management may provide details on their outlook for the current third quarter of the year on their earnings call with analysts and media or in subsequent days.
Is PLAY Stock a Buy or Sell?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on PLAY stock based on five Buys and two Holds assigned in the past three months, as indicated by the graphic below. There are currently no Sell ratings on Dave & Buster’s stock.
After a 45% year-to-date decline in its share price, the average PLAY price target of $56.50 per share implies 89% upside moving forward. However, it’s worth noting that estimates will likely change following today’s earnings report.
