What the bad jobs report means for markets
On Monday, Benchmark analyst Todd Brooks maintained a Hold rating on Texas Roadhouse (NASDAQ: NASDAQ:TXRH) stock, a $12.4 billion restaurant chain that has delivered impressive returns with a 9.7% gain over the past year. According to InvestingPro analysis, the stock is currently trading slightly above its Fair Value, with 13 analysts recently revising their earnings expectations downward. The company reported first-quarter 2025 operating results, with revenues exceeding consensus estimates but facing challenges in restaurant-level operating margin (RLOM) performance.
Texas Roadhouse’s revenues for the quarter reached $1.45 billion, surpassing the consensus estimates of $1.44 billion. This increase was attributed to a same-store sales (SSS) growth of 3.5%, which was higher than the anticipated 2.7%. The company’s robust 15.1% year-over-year revenue growth demonstrates strong momentum, though InvestingPro data shows persistent margin challenges with a gross profit margin of 18.6%. Despite this positive trend in sales, the company experienced pressure on costs, leading to a 40 basis point decline in RLOM.
The company’s earnings per share (EPS) for the quarter came in at $1.70, falling short of the consensus forecast of $1.76. Adjusted EBITDA (AEBITDA) was reported at $184 million, which was also below the expected $189 million. The softer RLOM performance contributed to these lower-than-expected earnings figures.
Management provided an update on the quarter-to-date same-store sales, indicating that the strong performance seen in March has continued. This update follows a February that was negatively impacted by weather-related issues. However, the analyst pointed out that despite the improved SSS trends over the past two months, there are concerns regarding the increasing commodity costs and ongoing volatility in consumer confidence and macroeconomic trends.
In light of these factors, Benchmark has decided to maintain its Hold rating on Texas Roadhouse stock at its current valuation. The company’s recent performance reflects a mix of positive sales trends counterbalanced by cost pressures and broader economic uncertainties. InvestingPro subscribers have access to 12 additional key insights about TXRH, including detailed analysis of its financial health, which currently rates as "GREAT" with a score of 3.23 out of 5.
In other recent news, Texas Roadhouse reported its first-quarter 2025 financial results, revealing a mixed performance. The company’s earnings per share (EPS) came in at $1.70, slightly below the forecasted $1.80, while revenue met expectations at $1.45 billion. Despite the earnings miss, the company experienced a 9.6% increase in revenue year-over-year, driven by a 3.5% rise in same-store sales. Analysts at Stifel maintained a "Hold" rating on the stock but raised their price target from $170 to $180, citing mixed financial results and a cautious market valuation. Meanwhile, Evercore ISI lifted its price target for Texas Roadhouse from $185 to $190, maintaining an "Outperform" rating due to a robust recovery in sales and customer traffic.
The first quarter saw a decrease in restaurant operating margins, primarily due to increased costs, which impacted overall profitability. Texas Roadhouse has adjusted its commodity inflation forecast to 4% for the year, reflecting anticipated beef cost increases and potential tariff impacts. Looking forward, Evercore ISI projects an EPS of $7.38 for 2026, slightly below the consensus estimate, with expectations of continued pressure on food costs. Despite these challenges, Texas Roadhouse has managed to accelerate traffic growth without relying on value promotions or new menu advertisements, highlighting the brand’s strength during uncertain economic times.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.