Dave & Buster’s Stock Rises After Earnings Topped Estimates.

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Shares of

Dave & Buster’s Entertainment

jumped Wednesday after the entertainment and dining venue operator posted quarterly earnings that topped Wall Street expectations, overshadowing lagging trends in the company’s special events segment.

Dave & Buster’s reported third-quarter adjusted earnings of 21 cents a share, above estimates of 13 cents. Revenue in the quarter was $318 million, below analysts’ forecasts of $319.7 million but up 6.2{614c55998ee2f2593d42882a86444f5648ce8ae9e914fe55020881091372b47b} from $299.4 million in 2019.

Excluding seven stores located in states with vaccine mandates, comparable or same-store sales increased 1.1{614c55998ee2f2593d42882a86444f5648ce8ae9e914fe55020881091372b47b} vs. 2019. They decreased 0.4{614c55998ee2f2593d42882a86444f5648ce8ae9e914fe55020881091372b47b} compared with 2019 when including all stores.

The stock was rising 8.16{614c55998ee2f2593d42882a86444f5648ce8ae9e914fe55020881091372b47b} to $35.82 on Wednesday.

Walk-in comparable-store sales increased 6{614c55998ee2f2593d42882a86444f5648ce8ae9e914fe55020881091372b47b} in the third quarter while special event comparable-store sales declined 64{614c55998ee2f2593d42882a86444f5648ce8ae9e914fe55020881091372b47b} vs. the same period in 2019, the company said in a press release.

Dave & Buster’s said its business recovery has strengthened through the first five weeks of the fourth quarter, during which comparable-store sales rose 3.5{614c55998ee2f2593d42882a86444f5648ce8ae9e914fe55020881091372b47b} compared with the same period in 2019. Walk-in comparable store sales increased 14{614c55998ee2f2593d42882a86444f5648ce8ae9e914fe55020881091372b47b}.

However, special event comparable-store sales in the fourth quarter, the company said, have declined 59{614c55998ee2f2593d42882a86444f5648ce8ae9e914fe55020881091372b47b} compared to 2019.

Dave & Buster’s noted that fourth-quarter revenue will be “negatively impacted by both a lagging special events business relative to 2019, which typically carries a much higher penetration in the fourth quarter due to holiday parties, and from a calendar shift in its key holiday periods.”

Analysts reiterated their ratings on the stock. Raymond James maintained its rating of Strong Buy with a $55 price target.

“Sales are trending slightly above ‘19 levels (stronger walk-in partially offset by weaker special events), while profitability continues to significantly exceed management’s post-Covid recovery targets,” said Raymond James analyst Brian Vaccaro.

Bottom line, “we believe PLAY shares are materially undervalued at an EV/EBITDA in the mid-5’s,” Vaccaro said.

William Blair lowered its full-year 2021 revenue expectations to $1.32 billion from $1.33 billion. The firm dropped its revenue forecast for 2022 to $1.56 billion from $1.58 billion previously. The analysts reiterated their Outperform rating on the stock.

The board of Dave & Buster’s also approved a new share repurchase program of $100 million. The company suspended the program in 2020 during the pandemic.

Write to Karishma Vanjani at [email protected]