Dave & Buster’s Hits the Winner’s Circle Again

Source: Dave & Buster’s.

Regulars atDave & Buster’s know all about the Winner’s Circle, the redemption store at every location where patrons can trade in their arcade-earned points for cool prizes. Well, shareholders seem to be hitting it with every passing quarter in the eatertainment chain’s brief second tenure as a public company.

Dave & Buster’s came through with another blowout quarter after yesterday’s close. Revenue rose 18% since the prior year’s third quarter to hit $192.8 million, backed by the opening of new stores and an impressive 8.8% surge in comparable-store sales. Dave & Buster’s posted an adjusted profit of $0.12 a share, reversing a small loss.

Folks play games at Dave & Buster’s, and Dave & Buster’s turns right around and toys with the Wall Street pros. Analysts were holding out for adjusted earnings of only $0.03 a share on a 14% top-line spurt.

This isn’t the first time Dave & Buster’s has blown through Wall Street profit targets. It has done so every single time since going public late last year, and the results haven’t even been close.

Source: Yahoo! Finance.

We’re talking about beating analyst income estimates by at least a double-digit margin every single time out. That’s not too shabby for a company that was so out of favor when it went public 14 months ago that it had to price its offering at the low end of its range.

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It’s been all uphill ever since. The stock has soared 146% since going public at $16 last October, and that’s before today’s inevitable pop.

Dave & Buster’s model is unique. It blends a monster arcade, upscale diversions, and a slightly upscale approach to casual dining in big-box buildings. You don’t often see an eatery concept where food and drinks account for a little less than half of total revenue, but it works. The games provide higher margins than the eatery side, also making Dave & Buster’s less susceptible to the volatility of food prices.

Investors are digging Dave & Buster’s, and the fast-growing chain is making it easy to love. It has followed each of its market-thumping quarterly reports with boosted guidance.

There were 77 locations open by quarter’s end, seven ahead of where it was a year earlier. Dave & Buster’s is targeting a long-term growth rate of roughly 10% a year. Tack on a reasonable uptick in comps, and you have steady top-line growth for the next few years. As long as consumers don’t sour on the concept and Dave & Buster’s has plenty of viable real estate left to tackle, it should continue to be a market winner — and that’s how you make it to the winner’s circle.

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The article Dave & Buster’s Hits the Winner’s Circle Again originally appeared on Fool.com.

Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Dave & Buster’s Entertainment. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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