Dave & Buster's Entertainment Raises Guidance On Strong New Unit Performance

Dave & Buster's Entertainment Inc PLAY revised its 2018 financial outlook to reflect positive fourth-quarter comps and raised its sales and EBITDA guidance for the year, indicating that new unit openings continue to be strong, according to Raymond James.

The Analyst

Raymond James’ Brian Vaccaro maintains an Outperform rating on Dave & Buster's Entertainment.

The Thesis

Dave & Buster's shares jumped after the company announced Q4 comps in the range of 1.8-2.5-percent and raised its 2018 sales and EBITDA guidance from a range of $1.243-1.255 billion to $1.259-1.263 billion and from $268-277 million to $276-278 million, respectively.

While some investors had been concerned about whether Q4 comps would turn  positive, others were “confused by initial 2019 revenue guidance which we continue to believe embeds a low-SD comp assumption,” Vaccaro said in a Monday note. 

The company’s sales guidance implies strong new unit performance, with average weekly sales in the 150-200-basis point range, the analyst said. Dave & Buster's reported 64-percent year-one cash-on-cash returns for the class of 2017, “which we believe is a new record high since the company re-accelerated unit growth,” Vaccaro said.

The net income guidance for 2018 was raised from a range of $106-113 million to $112-114 million.

Price Action

Dave & Buster's shares were up 2.82 percent at $52.20 at the time of publication Tuesday. 

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Photo courtesy of Dave & Buster's.