Doh! & Buster's

Dave & Buster's (NYSE: DAB  ) shareholders are probably scratching their heads. In April, the company was looking busted up, only to turn the tide with a lights-up performance last quarter. Unfortunately, the positive momentum didn't carry forward into its newest quarterly figures.

When the company released its fiscal 2004 results earlier this year, I commented that analyst expectations were too high for fiscal 2005. At the time, analysts were looking for $1.18 per share (EPS), and I argued that investors should look for much more conservative EPS growth in the range of 10%. Shareholders can forget about growth; D&B announced that earnings for fiscal 2005 are expected to be in the range of $0.64 to $0.70, well shy of last year's mark of $0.87.

The bad news was let out of the bag in August, when Dave & Buster's used preliminary results to prepare investors for the dud that would come in the latest period. In the release, the company pointed toward lagging performance at its Jillian's units as the reason for the revised estimates. In response, it's planning to convert the remaining Jillian's units to D&Bs.

These changes should bring improved performance in the quarters ahead, but it probably doesn't bring much comfort to current shareholders still reeling from the recent chop to their stock price. You may find comfort knowing that another operator of restaurant/entertainment complexes -- MotleyFool Hidden Gems selection CEC Entertainment (NYSE: CEC  ) with its Chuck E. Cheese brand -- has also seen better days.

So where should you go from here? After D&B's past inconsistencies, I can't recommend putting more money into your investment. However, running for the exits may be a bit premature. If you want to feel better about your D&B investment, hang out with Chuck E. Cheese investors whilst playing your favorite virtual reality game at your local Dave & Buster's. And in the meantime, sit tight and see whether D&B management can successfully integrate the Jillian's units and get the growth wheel spinning in the periods ahead.

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Fool contributor Jeremy MacNealy does not own shares in any of the companies mentioned.


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