CEC Entertainment's stock has tumbled as the operator of the Chuck E Cheese family restaurants lowered its fiscal full-year guidance and an analyst cut its rating.
CEC reported its second-quarter net income climbed 36 per cent compared with last year, but also said that revenue at restaurants open at least one year fell during the first three weeks of the current quarter, hurt by weak consumer confidence and more competition from PG-13 movies.
CEC cut its full-year earnings forecast to a range of $2.75 to $2.95 per share. Its previous outlook was for earnings between $3 and $3.03 per share.
Lynne Collier of Sterne, Agee & Leach dropped CEC’s rating to "Neutral" from "Buy," citing the lower revenue metric, which is down 7.9 per cent so far in the third quarter.
"Given the sharp decline in same-restaurant revenue in recent weeks, increasing uncertainty surrounding the consumer and higher commodity costs (particularly cheese), we recommend that investors move to the sidelines on CEC," said Collier.
