What happened
Shares of entertainment company Dave & Buster’s Entertainment, Inc. (NASDAQ: PLAY) jumped as much as 16.7% in trading Tuesday after reporting better-than-expected first-quarter fiscal 2018 results. Shares settled down slightly mid-day and were up 13.7% at 11:15 a.m. EDT.
So what
First-quarter revenue jumped 9.2% to $332.2 million on the back of six new store openings in the quarter. Net income was down slightly from a year ago to $42.2 million, or $1.04 per share. On the downside, comparable store sales fell 4.9% in the quarter, although the decline was offset by new store openings.
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According to FactSet, analysts were only expecting $321.6 million in revenue and earnings of $0.94 per share. It’s the earnings beat that really surprised investors and that’s why shares are moving sharply higher today.
Now what
Dave & Buster’s is expanding quickly, expecting to open 14 to 15 new stores this year. But management also expects same store sales to fall low-to-mid single digits in a sign that the business is weakening in core markets. Management is trying to increase interest in Dave & Busters by introducing Angus burgers and launching a virtual reality platform, so the hope is that the strategy will get stores growing again. If stores do begin growing we could see even bigger long-term gains for the stock.
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Travis Hoium has no position in any of the stocks mentioned. The Motley Fool recommends Dave & Buster’s Entertainment. The Motley Fool has a disclosure policy.
