Why Dave & Buster's Entertainment, At Home Group, and Independence Realty Trust Slumped Today

Markets Motley Fool

Wall Street bounced back slightly on Wednesday, recovering a portion of the losses from Tuesday's post-Labor Day session as some encouraging signs emerged from Washington. News that Democrats and Republicans in Congress had reached an agreement with President Trump on a deal to raise the debt ceiling and keep the government operating for another three months was seen as a step toward more cooperation in Washington, and a lack of any further bad news from North Korea was enough to offset concerns about the forecast impact of Hurricane Irma as it approaches Florida. The major U.S. indexes closed the day between 0.25% and 0.31% higher.

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Yet even on a broadly upbeat day for U.S. markets, some companies delivered bad news that sent their shares lower: Dave & Buster's Entertainment (NASDAQ: PLAY), At Home Group (NYSE: HOME), and Independence Realty Trust (NYSEMKT: IRT) were among the worst performers on the day. Below, we'll look more closely at these stocks to tell you why they did so poorly.

Dave & Buster's deals with sluggish results

Shares of Dave & Buster's Entertainment dropped 11.6% after the operator of dining and entertainment locations announced disappointing second-quarter financial results and offered weak guidance. Its revenue climbed 15% year over year, but comparable-store sales growth was just 1.1%. Dave & Buster's also said that it now expects comps in a range of just 1% to 2% for the 2017 fiscal year, down by a percentage point from its previous guidance range. The company is accelerating the pace of its restaurant openings, but investors Wednesday seemed more focused on the potential impact from hurricanes in the third quarter, as well as the ongoing pressures facing the restaurant industry generally.

At Home leaves investors wanting more

Share of At Home Group fell 10.1% even after the company reported solid numbers for its second quarter. The home decor specialist said that overall sales rose 23% on comparable-store sales growth of nearly 8%, and adjusted net income was up year over year by more than a third. CEO Lee Bird credited an attractive assortment of products, as well as successful investments in building out internal operations, for the positive results, but shareholders reacted badly to CFO Judd Nystrom's merely reiterating previous guidance for the current period based in part on "some third-quarter headwinds related to Hurricane Harvey." At Home will have to find ways to keep its growth rate as high as possible in order to satisfy long-term investors who've grown accustomed to the company's healthy pace of sales gains.

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Independence Realty sells some shares

Finally, Independence Realty Trust shares lost 9%. The real estate investment trust said it would sell 12.5 million shares of stock in order to help finance the $228 million purchase of a portfolio of nine multifamily properties that it announced earlier Wednesday. The acquisition should give Independence "a tremendous opportunity to increase our economies of scale and drive margin-enhancing operational efficiencies,"  said CEO Scott Schaeffer. Yet concerns about dilution from the deal sent shares lower, even though the move strategically extends Independence Realty's reach into key areas like Atlanta; Indianapolis; and Columbus, Ohio. Deals like this are a classic way for REITs to expand, but investors will still have to wait and see whether this one will eventually prove successful.

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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool recommends Dave & Buster's Entertainment. The Motley Fool has a disclosure policy.