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What happened
According to data provided by S&P Global Market Intelligence, shares of arcade bar Dave & Buster's Entertainment, Inc. (PLAY 0.71%) fell 15.7% in September after the company reported full-year guidance that failed to inspire investors.
So what
Second-quarter revenue of $244.3 million was about in line with estimates and earnings of $0.50 per share, beat expectations by $0.06. But the focus of the quarter was on same-store sales.
Same-store sales rose just 1% and that caused management to lower full-year same-store sales guidance from growth of 3.25%-4.25% to 2.25%-3.25%. Same-store sales are normally used as a measure of a company's health, and if they're growing, the leverage of the restaurant business can help grow net income faster than revenue.
Now what
A 1% decline in same-store sales isn't the end of the world and investors should keep in mind that Dave & Buster's is still expecting growth in 2016. Shares may have simply gotten ahead of themselves, especially as they were trading at 21 times earnings even after last month's drop.
For long-term investors, a disappointing quarter isn't worth panicking over. Dave & Buster's is still a growing business that's in a great position in the restaurant/entertainment space and that's worth holding onto right now.
