Dave & Buster's Entertainment, Inc. PLAY's Tuesday earnings report will likely reinvigorate the bull versus bear debate, as some bulls highlight the stock's depressed valuation while bears point to multiple disappointing metrics.
Dave & Buster's earnings report was mixed, as the company reported better-than-expected EPS and EBITDA, but same-store sales of negative 1.3 percent that were worse than the flattish estimate Barish was modeling. (See Barish's track record here.)
Same-store sales are expected to persist and the fourth quarter is off to a poor start, likely due to a headwind of mild weather, Barish said.
The company's development pipeline is "full," and new openings continue to generate strong returns, although they come at the expense of margins in some cases, the analyst said.
Tight labor cost controls helped keep unit-level margins flat, and investors should expect deleverage in the fourth quarter and into 2018, according to Jefferies.
Overall, the near-term visibility is a "bit more challenged," but the Dave & Buster's could find support due to its valuation at 8.5x 2018 EBITDA, Barish said. The company's share buyback program also adds support, and the stock could be attractive as a shareholder return story in the near-term until a same-store sales catalyst plays out, the analyst said.
Shares of Dave & Buster's were trading higher by more than 5 percent after Wednesday's opening bell.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on Bankrate.com. The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.
All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the Bankrate.com rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.
Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.
Rate collection and criteria: Click here for more information on rate collection and criteria.