Shares of bowling company Bowlero (NYSE: BOWL) jumped on Monday after the company reported the results for its fiscal 2023. As of 10 a.m. ET, Bowlero stock was up 11%.
Bowlero owns over 300 bowling centers and the Professional Bowler Association. Having this unique combination of assets supports management’s belief that it can grow consumer demand as it acquires other centers, remodels outdated buildings, and opens new locations.
So far, it seems like Bowlero’s plan is working. In its fiscal 2023, which ended on July 2, revenue was up 16% year over year to nearly $1.1 billion. Some of this was due to acquisitions. But the company’s same-store sales were up 12.8%, which is encouraging.
With a capital-intense, acquisitive business like Bowlero, profitability metrics can be a little tough to follow. So I’ll include the company’s operating profit here since this is a more direct look at the business itself.
Bowlero had an operating profit of $201 million in fiscal 2023. That was about a 19% margin and up 72% year over year, which is strong on both counts and contributed to investors’ excitement today.
Looking ahead, shareholders might be discouraged because organic growth from Bowlero looks meager. Management expects full-year fiscal 2024 revenue of $1.19 billion, at most, which would represent 12% growth from fiscal 2023. But much of this growth will likely be inorganic from acquisitions.
That said, acquisitive businesses often dilute shareholders. And Bowlero is also a former special purpose acquisition company (SPAC), which tends toward dilution. However, Bowlero is managing its share count well as it grows, with its outstanding share count down almost 6% year over year on a fully diluted basis.
If this encouraging signal continues, shareholders should get to participate in the upside as Bowlero grows, even if growth is largely inorganic. That’s an encouraging thought when looking ahead.
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Jon Quast has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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