KEY TAKEAWAYS
- Dave & Buster’s Entertainment exceeded estimates for EBITDA, boosted its stock buyback program, and gave a positive outlook in its earnings report this week.
- The news offset fourth-quarter profit and sales results that came in short of forecasts.
- Shares of Dave & Buster’s traded near their all-time high Wednesday and have jumped more than 25% this year.
Shares of Dave & Buster’s Entertainment (PLAY) jumped early Wednesday after the game-themed restaurant chain posted a better-than-expected key profit metric and announced an increase in its stock buyback program.
Dave & Buster’s reported fourth-quarter earnings before interest, taxes, depreciation, and amortization (EBITDA) of $151.8 million, an increase of 9.7% from the year before and above analysts’ estimates. CEO Chris Morris said the company’s turnaround plan is working.
The chain opened six new domestic stores and plans to add 15 more this fiscal year, as well as up to four international units, Morris said. He noted during a call with analysts that the firm’s moves to overhaul locations, make menu adjustments, and raise prices have been effective so far.
In addition, the company said it was boosting its current share repurchase plan by $100 million, bringing the total value of shares it is authorized to buy back to $200 million.
Truist Securities raised its price target on the stock from $75 to $78 each, saying Dave & Buster’s was introducing new initiatives to grow sales which are expected to counteract near-term macroeconomic pressures.
The upbeat EBITDA number offset Dave & Buster’s lackluster fourth-quarter financial results. Earnings per share (EPS) came in at $1.03, with revenue up 6.3% to $599.1 million. Both missed forecasts. Same-store sales dropped 7%. Executives blamed bad weather in January for reducing restaurant traffic.
Dave & Buster’s shares were trading up 11% at $68.68 each as of 10:40 a.m. ET and are up more than 25% this year.
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