Dave & Buster's (NASDAQ:PLAY) shareholders have endured a volatile 2018 as the stock oscillated between declines and gains of over 20%. The swings reflect investor uncertainty about a rebound that, so far, has delivered improving profitability and a new dividend, but no sales growth to speak of.

The restaurant and entertainment chain's last quarterly report of the year is set for Dec. 11, and it could go a long way toward resolving key questions about the business's overall health. Let's take a closer look at what investors will be watching for in that announcement.

A father and son play an arcade game.

Image source: Getty Images.

The key growth metrics

Comparable-store sales, or sales at existing locations, have declined for four consecutive quarters stretching into late 2017. However, Dave & Buster's posted a sharp improvement in that trend last quarter, with comps falling just 2.4% compared the prior quarter's 5% slump.

Executives credited popular game introductions like exclusive virtual-reality titles with helping drive customer traffic. They said they were hoping to build on that momentum, and a further comps improvement -- especially a move back into positive territory -- would confirm that the chain is on the right track.

At the same time, a big part of the growth thesis involves Dave & Buster's building a far larger platform than its current base of 120 locations spread out through most of the U.S. The company hopes to roughly double that figure over the long term, and its current pace is roughly 15 stores per year. Investors will get an update about the health of the latest crop of locations, which are trending toward smaller footprints. These new launches have Wall Street pros expecting overall sales to rise by about 9% to $273 million.

Rising profitability

Investors were excited to see profitability jump last quarter as operating income improved to 14.4% of sales from 13.9% a year earlier. The gains largely reflected a sales shift toward the entertainment side of the business, which delivers higher margins than the food segment. That trend should have carried through to the third quarter and kept profitability rising.

CEO Brian Jenkins and his team have launched several initiatives aimed at improving the restaurant division, including by paring back the menu and raising food quality. We'll find out on Tuesday whether entertainment fans responded to the moves by ordering more snacks and alcoholic drinks.

The holiday outlook

Executives already have good data on the key holiday season that will inform their final official update to the 2018 outlook. As it stands today, that forecast predicts revenue rising to between $1.23 billion and $1.26 billion as comps fall by around 3%. These figures should translate into net income of roughly $105 million at the midpoint of guidance, but each element of that outlook could change on Tuesday.

Both the sales and earnings predictions were bumped up in Dave & Buster's second-quarter report in mid-September thanks to the encouraging operating trends around customer traffic and profitability. The chain also initiated a regular dividend payment, which implies management is feeling confident about the company's growth potential. Dave & Buster's can confirm that this confidence was well placed by showing more progress in its rebound, particularly with a return to sales growth heading into the holiday quarter.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool recommends Dave & Buster's Entertainment. The Motley Fool has a disclosure policy.