Why Shares of Dave & Buster's Entertainment, Inc. Popped 19% Today

By Travis Hoium Markets Fool.com

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Image source: Getty Images.

What happened

Shares ofDave & Buster's Entertainment, Inc. (NASDAQ: PLAY) jumped as much as 18.8% after the restaurant company reported third-quarter earnings. At 1:30 p.m. EST, the stock was still up 17% on the day.

So what

Revenue in the quarter was up 19% to $228.7 million and comparable-store sales increased 5.9%. Net income increased from $4.6 million to $10.8 million, or $0.25 per share, easily topping the $0.13 Wall Street expected. Management also said full-year revenue will be $998 million to $1.003 billion, up from previous guidance of $983 million to $995 million.

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Dave & Buster's is also expecting to open 11 new stores this year, exceeding management's expectation of nine to 10. This will help growth, and given the increase in comparable-store sales, it will be a positive boost for the company.

Now what

Beating expectations and exceeding guidance are great, but the key for the restaurant business is to continue to leverage existing operating expenses to improve the bottom line. Dave & Buster's is doing that by increasing comparable-store sales at a rapid clip, driven by customers engaging more and more in the amusement side of the business.

Given the growth in stores and the strength at existing locations, this is a company well positioned for the future as more people look for new forms of entertainment. And that could give the stock a lot of room to run higher in the future.

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Travis Hoium has no position in any stocks mentioned. The Motley Fool recommends Dave and Buster's Entertainment. 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.