Dave & Buster's

Dave & Buster's Entertainment (PLAY - Get Report) shares traded higher Wednesday after the themed restaurant group posted stronger-than-expected fourth quarter earnings and comparable sales growth thanks in part to a new virtual reality game platform leveraging movies series such as Men in Black and Star Trek. 

Dave & Busters said earnings for the three months ending on February 3, the group's fiscal fourth quarter, came in at 75 cents a share, down 11.8% from the same period last year but firmly ahead of the Street consensus forecast of 63 cents a share. Group revenues, the company said, rose 8.8% to $331.8 million while comparable store sales jumped 2.9%, one of the strongest readings for the company in six quarters and ahead of the 2.1% forecast.  

Looking into 2019, Dave & Buster's said it sees operating earnings in the region of $285  million to $300 million from revenues that could rise to $1.4 billion over the fiscal year. The group plans to open between 15 and 16 new locations, with a capital spending allocation of $200 million, while forecasting comparable store sales that would be flat to around 1.5% higher than over the 2018 fiscal year.

"I want to emphasize as an organization, we remain focused on four strategic priorities, which include evolving our offering, improving our guest experience, effectively communicating our offering in value, and expanding a great brand," CEO Brian Jenkins told investors on a conference call late Tuesday. " Looking forward we are poised to deliver yet another year of record revenue and EBITDA performance, our proven business model, strong team, robust real estate pipeline and financial flexibility are competitive advantages that position us well for the future."

Dave & Busters shares were marked 3.9% higher Wednesday at $52.48 each, a move that would extend the stock's year-to-date gain to around 23.4%.

"Following its January preannouncement that was ahead of our expectations, PLAY's FY4Q18 performance exceeded even the high end of the updated guidance ranges," said BMO Capital Markets analyst Andrew Strelzik. "Against admittedly easy compares and aided by favorable weather/calendar shifts, amusement comps returned to mid-single-digit growth for the first time in six quarters and food/beverage comps surprisingly turned positive for the first time in two years."

Dave & Busters will launch its fourth virtual reality game, this time based on the Men in Black film series, later this year. Interim CFO Joe DeProspero said the ongoing shift towards simulation games had supported amusement margins, while CEO Jenkins said the platform was a "key differentiator" for the Dallas, Texas-based group.

"Looking at Q4, our new release Dragonfrost VR was an excellent addition to our VR offering and has performed well for us. At the same time, Jurassic World VR Expedition, Halo and Connect 4 Hoops also remained strong," Jenkins said.

"Our Q1 2019 slate includes several new proprietary titles available only at D&B. In mid-February, ahead of the release of the Captain Marvel movie we launched Marvel: Contest of Champions, featuring highly popular characters from the Marvel Universe," he added. "This title includes collectible cards, designed really to foster repeat play. And then just last week, we introduced Star Trek: Dark Remnant, our third VR title, further strengthening our library of VR attractions."