Why Dave & Buster’s Entertainment, Inc.(NASDAQ: PLAY) stock is going gangbusters today

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Dave & Buster’s Entertainment, Inc.(NASDAQ: PLAY) stock surged over 8.9% in the after-hours session on December 5th, 2017 (as of  7:59PM EST; Source: Google finance) driven by their better than expected third quarter of 2017 performance as well as guidance.

The group now expects their Comp store sales growth on a comparable 52-week basis to be flat to up 0.75% for the year, hurt by hurricanes in the third quarter and a slower than expected start to the fourth quarter. On the other hand, the trends in their special events bookings appear to be recovering and looks solid ahead of some of their seasonally strongest week of the year.

They are aiming 14 new store openings, including a projected mid-January opening of our Puerto Rico store, while opened 13 stores so far, this year with 11 under construction at this point. They are now opening their Puerto Rico store in mid-January from October.

 

The group’s revenues rose 9.3% yoy in the third quarter of 2017 to $250 million against $228.7 million in pcp driven by strong contributions from newer stores.

On the other hand, revenues from their 76 comparable stores fell 1.3% to $196.4 million while revenues from their 25 non-comp stores including one that opened during the quarter enhanced $52.4 million. But this was estimated, coming from the unfavorable impact of hurricanes during the quarter of 50 basis points on comp sales and $2 million in total revenue. But, the group’s total Amusements and Other sales surged 11.8%, and Food and Beverage enhanced 6.3%. Amusement and Other segment contributed a major portion of 56.9% of total revenues, which is a 120-basis point increase from pcp.

Food and Beverage costs as a percentage of Food and Beverage sales enhanced 20 basis points from pcp, as over 2.3% in food pricing, 1.9% in bev pricing offset flat commodity inflation and a growing mix of new stores. Meanwhile, the group’s non-comp stores, which accounted 25% of their store base performed well and delivered solid returns.

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