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It is Expected That Bowlero Will Initiate a Dividend With a Yield That is Well Above the S&P 500

February 5, 2024
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Bowlero Corp. experienced a surge in its stock shares on Monday following the announcement by the bowling-center operator and owner of the Professional Bowlers Association that it would initiate dividend payments to shareholders, coupled with the release of fiscal second-quarter revenue figures that surpassed expectations.

In a move signaling financial health, Bowlero Corp. declared a cash dividend of 5.5 cents per share, slated for distribution on March 8 to shareholders of record as of February 23. Calculated based on the stock's closing price of $11.60 on Friday, this translates to an annual dividend rate of 22 cents per share, resulting in a dividend yield of 1.90%. Comparatively, this yield outperforms the implied yield for the S&P 500 index, which stands at 1.43%. In response to this positive news, the stock saw a 6.5% increase in premarket trading.

For the quarter ending December 31, the company reported a remarkable 11.8% increase in revenue, reaching $305.7 million. This figure surpassed the FactSet consensus of $300.4 million, with the revenue surge being particularly attributed to a 30% growth in Bowlero's events business. Strategic acquisitions and new constructions contributed an additional $41 million to the overall revenue. Notably, this quarter marked the first full quarter following the completion of the Lucky Strike acquisition on September 18, 2023.

Despite posting positive same-store revenue for the quarter, Bowlero disclosed a second-quarter net loss of $63.5 million, a stark contrast to the net income of $1.4 million reported during the same period in the preceding year. The net loss attributable to common stockholders widened to $65.4 million, equivalent to 44 cents per share, compared to the previous year's $1.4 million, or one cent per share. A notable component of the net loss was a substantial $64.1 million expense stemming from the impact of the earnouts for the period, with 11.42 million unvested earnout shares outstanding as of December 31.

In a separate development, the company revealed its repurchase of $80 million worth of stock in the second quarter, following the earlier buyback of $131 million worth of shares in the first quarter. Bowlero not only replenished the buyback program to $200 million but also removed the program's expiration date, underscoring its commitment to shareholder value.

Looking forward, Bowlero remains optimistic about fiscal 2024, maintaining its expectation of revenue growth between 10% and 15%. The current FactSet revenue consensus of $1.16 billion implies a growth rate of 9.1%. The company emphasized its commitment to substantial reinvestment in the business and increased its allocation for acquisitions from $160 million to $190 million.

Over the past three months leading up to Friday, Bowlero's stock witnessed a robust 18.6% rally, outpacing the S&P 500, which posted a comparatively modest 13.8% gain.

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Valentyna Semerenko
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Eric Ng
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John Liu
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