Dave & Buster’s (PLAY) reported second-quarter earnings on Monday, and they were a slam dunk. Shares of PLAY gained 4% Tuesday and are adding to that today thanks to better-than-expected results on the top and bottom line.
The nitty gritty details: Dave & Buster’s earnings from the most recent quarter came to 45 cents per share, besting the analyst consensus by more than a dime. That came thanks to 14% sales growth, which put the revenue tally at $222.7 million versus the consensus of $216.3 million.
In my opinion, these strong financial results are the cherry on top of the bullish case for PLAY stock.
In fact, I appeared on Fox Business on June 2 to talk about this pick. As I noted then, Dave & Buster’s is a great way to play increased consumer spending.
The same thesis holds true for picks like Texas Roadhouse (TXRH) and Starbucks (SBUX). Consumers are beginning to open their purse strings by spending comparably small but still significant amounts on things like eating out or picking up a Starbucks coffee and snack.
PLAY stock is perfectly positioned to pocket a good chunk of those dollars (which is especially true considering the restaurant/bar also has alcohol in its sales mix) and the proof thusfar has been in its same-store sales.
Monday’s earnings report showed especially strong same-store sales for Dave & Buster’s at just under 10% year-over-year growth — more than double the rate for the same period last year.
While PLAY stock does sport a forward price-to-earnings ratio of just under 30 thanks to its recent run, I still think it’s a good time to get in — especially considering the company priced a secondary offering of 8.5 million shares at $31 at the end of last month, and because the momentum is just getting started.
Dave & Buster’s is slated for 20% per year growth over the next half decade.
Charles Payne agreed when we chatted about PLAY stock on Fox Business last week, and he said that if shares broke through $35, they would go right through to $40. I tend to agree and, after this week’s strong report, shares have reached that target.
If you’re looking for a stock with strong momentum and potential upside, Dave & Buster’s could be one of your best bets.
Hilary Kramer is the editor of GameChangers, Breakout Stocks Under $10, High Octane Trader,Absolute Capital Return and Value Authority. She is an accomplished investment specialist and market strategist with more than 25 years of experience in portfolio management, equity research, trading, and risk management. She has extensive expertise in global financial management, asset allocation, investment banking and private equity ventures, and is regularly sought after to provide her analysis on Bloomberg, CNBC, Fox Business Network, and other media.
