What happened
Shares of Dave & Buster's (PLAY -4.99%), which owns mixed restaurant and entertainment venues, rose 17% at its highs this week, according to data from S&P Global Market Intelligence. The big story here was the company's March 28 earnings release, but it requires a little digging to understand why there was so much enthusiasm on the part of investors. That said, there are really three important time periods to look at in the earnings update.
So what
First, sales in the fourth quarter of 2021 jumped a huge 193.7% over the same quarter in 2020. That's a great number, but one that really just highlights the massive impact of the pandemic. Earnings followed a similar path, with fourth-quarter 2021 earnings per share at $0.52, up from a loss of $1.19 in the final stanza of 2020. The second period to look at is the fourth quarter of 2021 versus the fourth quarter of 2019, before the pandemic. The company's top line was actually lower by 1.2%, with earnings off notably from the $0.80 per share it brought in during the fourth quarter of 2019. That provides a less favorable view, with results bouncing back notably from the worst of the pandemic hit but not quite all the way back to pre-pandemic levels.
Image source: Getty Images.
Which is where the third important time period comes into play and why investors were likely so upbeat about Dave & Buster's following its earnings release. In a section of the earnings release titled "First Quarter 2022 Business Update and Outlook," the company didn't provide any outlook. But the update was pretty positive, with management highlighting, "The Company's business has strengthened through the first eight weeks of the first quarter, during which comparable store sales increased 5.4% compared with the same period in 2019." In other words, it looks like Dave & Buster's business may have finally shifted back toward growth.
Now what
It's notable that the early 2022 strength showed up despite the omicron coronavirus variant, which hints that Dave & Buster's restaurants are doing well right now. That said, it is important to highlight that there was no outlook provided in the press release. That's likely because there's yet another variant on the horizon and, thus, the future for the company's business still remains a bit uncertain. Still, it's hard to deny that recent performance is pretty good; therefore, it makes sense that investors took a positive view of things this week.
