Below is a brief note from CEO Keith McCullough on why we're adding Dave & Buster's Entertainment (PLAY) to the short side of Investing Ideas today:
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Looking for shorts that are actually working (but have bounced in the last week with the US stock market ramping to all-time highs)? How about PLAY? This remains one of Restaurants analyst Howard Penney's favorite shorts. Here's an excerpt from a recent Institutional Research note where Howard reviewed Dave & Buster's deteriorating fundamentals: "PLAY reported a very disappointing quarter that caused the stock price to fall by 7% in early morning trading. As we spoke about in our presentation, the PLAY business is aggressively slowing, as evidenced by SSS of +1.1% vs FactSet +2.6%, and management appears to agree, as the Company updated their FY17 outlook. Among the revisions were same-store sales of +1%-2% (vs prior guidance of 2%-3%) and EBITDA of $270M-$276M (vs prior guidance of $276M-$282M) – we believe these revised estimates may have another step down. Breaking down the comp by category, amusement grew by +4.7% (vs. consensus +5.5%), food was down -3.5% (vs. consensus -1.6%), and lastly beverage was down -3.3% (vs. consensus -3%)." Sell the bounce, KM |