The 10-second takeaway
For the quarter ended Jan. 1 (Q4), CEC Entertainment met expectations on revenues and crushed expectations on earnings per share.
Compared to the prior-year quarter, revenue dropped slightly and GAAP earnings per share increased.
Gross margins increased, operating margins dropped, net margins were steady.
CEC Entertainment reported revenue of $178.6 million. The three analysts polled by S&P Capital IQ predicted sales of $177.8 million on the same basis. GAAP reported sales were 2.3% lower than the prior-year quarter's $182.8 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
Non-GAAP EPS came in at $0.21. The five earnings estimates compiled by S&P Capital IQ predicted $0.15 per share on the same basis. GAAP EPS of $0.15 for Q4 were 7.1% higher than the prior-year quarter's $0.14 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 101.1%, 260 basis points better than the prior-year quarter. Operating margin was 3.3%, 60 basis points worse than the prior-year quarter. Net margin was 1.5%, about the same as the prior-year quarter.
Next quarter's average estimate for revenue is $255.5 million. On the bottom line, the average EPS estimate is $1.80.
Next year's average estimate for revenue is $834.3 million. The average EPS estimate is $3.08.
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 73 members out of 90 rating the stock outperform, and 17 members rating it underperform. Among 43 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 33 give CEC Entertainment a green thumbs-up, and 10 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on CEC Entertainment is outperform, with an average price target of $40.38.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.