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Q1 2018 earnings result

Dave & Buster’s earnings result for Q1 2018 shows diluted earnings per share of $1.04 per share, beating the prevailing market expectation of around 95 cents per share.

Albeit a decrease in net income of about 1.5 %, from $42.8 million in Q1 2017 to 42.2 million in Q1 2018, we observe increased earnings per share being caused by share “buy back” activities. We see this as a positive sign as shares where able to be bought at a relatively low price whilst adding more buck to remaining investors. Comparing to Q1 2017, comparable stores sales decreased by 4.9%.  We note a continuing downtrend of comparable store sales. Pre-opening costs increased by $2.6 million to $7.1 million from $4.5 million. This shows further commitment to growth targets. Adjusting for non-cash items and pre-opening costs (investing activities) store operating income increased from $107.6 to $108.8 million. We deem this to be very positive as well, as normal operation increasingly contributes to liquidity growth.

The company now owns and operates 112 stores.

Share price development

Buy interests have been strong since the earnings announcement. The price increased over 20% the first 24 hours following the earnings announcement. As of today, the price increase is moving towards 30% since the announcement two days ago.  Further buying interest has kept the price at an increased level, effectively breaking its one-year downtrend.  The downtrend was sparked by concerns of decreasing comparable store sales.

PLAY share price development

2018 Outlook

The outlook for the year 2018, ending on February 9, 2019, has been reaffirmed. We note no change to the outlook communicated in 2017:

  • Total revenues of $1.20 billion to $1.24 billion
  • Comparable store sales decrease in the low-to-mid single digits (on a comparable 52-week basis)
  • 14 to 15 new stores
  • Net income of $95 million to $110 million
  • Effective tax rate of approximately 24% (including the estimated impact of the Tax Cuts and Jobs Act of 2017) (vs. 23% to 24% previously) and a diluted share count of approximately 40.5 million shares (vs. 41.0 million shares previously)
  • EBITDA of $255 million to $275 million
  • Total capital additions (net of tenant improvement allowances and other landlord payments) of $179 million to $189 million, up from $170 million to $180 million

About Dave & Buster’s Entertainment, Inc.

Founded in 1982 and headquartered in Dallas, Texas, Dave & Buster’s Entertainment, Inc., is the owner and operator of 110 venues in North America that combine entertainment and dining and offer customers the opportunity to “Eat, Drink, Play and Watch,” all in one location.  Dave & Buster’s offers a full menu of entrées and appetizers, a full selection of alcoholic and non-alcoholic beverages, and an extensive assortment of entertainment attractions centered around playing games and watching live sports and other televised events.  Dave & Buster’s currently has stores in 37 states, Puerto Rico, and Canada.

Conflicting interest disclosure

As of the time of this writing, we currently hold 100 shares.

DISCLAIMER

None of the above statements are to be construed as financial advice nor should they be used as a basis for making a financial decision. Investing in financial instrument carries great risks and may cause you to lose potentially much much more than what you invested. Historical market performance does not give an indication of future market performance. We advise you to hire a financial expert before making any financial decision of any kind and to ensure that you are aware of all the risks associated with investing in a particular financial product. Participating in electronic markets carry additional risks as well.

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