Evercore ISI lifts Texas Roadhouse stock target to $190

On Friday, Evercore ISI made a positive adjustment to Texas Roadhouse (NASDAQ:TXRH)’s financial outlook, raising the restaurant chain’s price target from $185 to $190 while retaining an Outperform rating on the stock. The firm’s analysts cited a robust recovery in sales and customer traffic, despite recent challenges such as adverse weather conditions and health concerns. The company, currently valued at $11.46 billion, has demonstrated strong financial health with a perfect Piotroski Score of 9, according to InvestingPro data, suggesting robust operational efficiency and financial stability.

The company experienced a notable rebound with same-store sales (SSS) growth of 5% during the initial five weeks of the second quarter, which included a traffic increase of 3.1%. This performance came despite a difficult comparison from the previous year and a 50 basis point impact from the shift of Easter. The strong sales momentum builds upon Texas Roadhouse’s impressive 15.09% revenue growth over the last twelve months, with total revenue reaching $5.5 billion. Evercore ISI’s unchanged 2025 earnings per share (EPS) estimate of $6.53 reflects an expectation of continued SSS growth, now anticipated at 5% from the second to the fourth quarter, slightly higher than the consensus average of 4.5%.

However, this positive sales forecast is somewhat tempered by the anticipation of increased wage and commodity inflation, as well as the company’s conservative approach to pricing. As a result, the 2025 restaurant margin forecast has been adjusted slightly downward, from 16.5% to 16.2%, which is below the consensus estimate of 16.8% and represents a year-over-year decline of 90 basis points. InvestingPro data reveals that the company’s current gross profit margin stands at 18.56%, reflecting these ongoing cost pressures. For deeper insights into Texas Roadhouse’s margin trends and comprehensive financial analysis, investors can access the detailed Pro Research Report, available exclusively to InvestingPro subscribers.

Despite these cost pressures, Texas Roadhouse has managed to accelerate traffic growth without resorting to value promotions or new menu advertisements, a testament to the strength of its brand during a period of wavering consumer confidence. The adjustment in the price target to $190 is attributed to this solid traffic growth and the recognition of the company’s current under-earning.

Looking ahead to 2026, Evercore ISI anticipates an EPS of $7.38, marking a 13% year-over-year increase, although this is slightly below the consensus estimate of $7.66. The forecast assumes continued pressure on food costs, particularly beef, which could maintain restaurant margins at 16.2%, still shy of the long-term target of 17%-18%. Despite these challenges, InvestingPro analysis indicates that Texas Roadhouse is trading at an attractive P/E ratio relative to its near-term earnings growth potential, with 12 additional ProTips available to subscribers providing deeper insights into the company’s valuation and growth prospects. The new target multiple of 26 times the estimated 2026 EPS leans towards the higher end of the historical range and acknowledges the potential for margin expansion. If the company were to achieve a 17.5% margin within the long-term target range by 2026, this could imply an EPS of $8.60, which is 16% above the current estimate provided by Evercore ISI.

In other recent news, Texas Roadhouse Inc. reported its first-quarter 2025 financial results, showing a mixed performance. The company’s earnings per share (EPS) were $1.70, falling short of the forecasted $1.80. Despite this, Texas Roadhouse’s revenue met expectations, reaching $1.45 billion, marking a 9.6% increase year-over-year. The company experienced a 3.5% rise in same-store sales, with a 1.1% increase in customer traffic. However, challenges such as decreased restaurant margins and increased costs impacted overall profitability. The company’s future outlook includes EPS forecasts of $1.91 for Q2 2025 and $1.45 for Q3 2025, with revenue projections of $1.48 billion for Q2 2025. Inflation in commodities and labor costs are expected to continue, with full-year guidance for commodity inflation at approximately 4% and wage inflation at 4-5%. Texas Roadhouse also plans to open approximately 30 company-owned restaurants this year, reflecting ongoing expansion efforts.

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