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Dave & Buster’s (PLAY) Q3 Earnings: Another Beat in Store?


Dave & Buster’s Entertainment, Inc. PLAY is scheduled to report third-quarter fiscal 2017 results on Dec 5, after market close.

Last quarter, the company posted a positive earnings surprise of 29.09%. In fact, the company has surpassed the Zacks Consensus Estimate in each of the 12 quarters it has reported so far and has an average positive earnings surprise of 34.36% for the trailing four quarters.

Owing to its unique business style, Dave & Buster’s generates favorable store economics and strong return. The company continues to perform well on the customizable experience it offers across its platforms — “Eat, Drink, Play and Watch.”

Apart from operating in the restaurant space, Dave & Buster’s offers a wide range of recreational options like games and live sports along with other televised events. Focus on the gaming segment has cushioned the company against headwinds in the restaurant industry and is in turn driving market share and comps.

In fact, the company’s entertainment business, which accounted for nearly 57.7% of the total revenues in the last reported quarter has been the most significant contributor to top-line growth.

In fact, the consensus estimate for revenues for the quarter is pegged at $255.4 million, reflecting 11.7% year-over-year growth.

Moreover, Dave & Buster’s focus on enriching guest experience through digital enhancements also bodes well. The company believes that it can drive traffic by enhancing in-store and out-of-store customer experience via digital and mobile strategic initiatives as well as through better technology. In fact, the company is preparing to test technology initiatives such as pay at the table along with handheld ordering technologies that should drive the speed of service and overall guest satisfaction.

However, rising labor costs, pre-opening costs of outlets given the company’s unit expansion plans and expenses incurred to execute sales initiatives might dent profits in the to-be-reported quarter. Since all the restaurants are owned and operated by Dave & Buster's, instead of signing franchise agreements and putting the burden of costs on the franchisee, the company is solely responsible for the expenses of operating the business.

Subsequently, the consensus estimate for earnings for the upcoming quarter is pegged at 25 cents, reflecting a 1.3% year-over-year decline.

However, as per our proven model, Dave & Buster’s is likely to beat earnings because it has the perfect combination of the two key ingredients.

Zacks ESP: Dave & Buster’s has an Earnings ESP of +2.70%. This is a meaningful indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Dave & Buster’s has a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates.

Conversely, we caution against Sell-rated stocks (Zacks Rank #4 or 5) that are going into an earnings announcement.

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

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

Dave & Buster's Entertainment, Inc. price-eps-surprise | Dave & Buster's Entertainment, Inc. Quote

Other Stocks to Consider

Dave & Buster’s is not the only company looking up this earnings season. Here are some other companies in the Retail-Wholesale sector that investors may consider, as our model shows that they have the right combination of elements to post earnings beat this quarter:

American Eagle Outfitters, Inc. AEO has an Earnings ESP of +0.66% and a Zacks Rank #2. The company is scheduled to release its quarterly numbers on Dec 6, before market opens. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dollar General Corporation DG has an Earnings ESP of +0.89% and a Zacks Rank #2. The company’s quarterly numbers are scheduled for release on Dec 7, before market opens.

Conn's, Inc. CONN has an Earnings ESP of +25.00% and a Zacks Rank #3. The company’s quarterly results are slated for release on Dec 7, before market opens.

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