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On Tuesday, KeyBanc analyst Eric Gonzalez maintained a Sector Weight rating on Texas Roadhouse (NASDAQ:TXRH) without altering the price target. The restaurant chain, with a market capitalization of $11.5 billion and annual revenue of $5.37 billion, has demonstrated strong financial health with a perfect Piotroski Score of 9, according to InvestingPro data. Gonzalez acknowledged Texas Roadhouse’s robust performance in the fourth quarter, noting a 7.7% growth in same-store sales (SSS), marginally surpassing the 7.5% consensus. The company’s SSS growth and store-level margins exceeded expectations, contributing to a higher earnings per share (EPS). This performance aligns with the company’s impressive 16.01% revenue growth over the last twelve months.
Despite the positive outcomes of the fourth quarter, Gonzalez pointed out a slowdown in SSS growth during the initial half of the first quarter, recording 2.9% against 6.8% in the same period the previous year. This deceleration was attributed to weather conditions and calendar shifts. Gonzalez also highlighted that food inflation remained relatively mild in the fourth quarter, as anticipated. For deeper insights into Texas Roadhouse’s performance metrics and future outlook, investors can access comprehensive analysis through InvestingPro’s detailed research reports.
Looking ahead, Texas Roadhouse has revised its forecast for 2025, leading Gonzalez to adjust his 2025 EPS estimate to $6.91 from the previous $6.97. This revision accounts for anticipated higher food costs and a slight decline in SSS growth in the first half of the year. Despite the adjustments, Gonzalez believes that Texas Roadhouse’s stock is currently fairly valued at approximately 25 times the estimated 2025 EPS, justifying the Sector Weight rating. This valuation assessment aligns with InvestingPro’s Fair Value calculation, which suggests the stock is currently trading near its fair value, with analysts forecasting FY2025 EPS of $7.01.
In other recent news, Texas Roadhouse reported stronger-than-expected financial results for the fourth quarter of 2024. The company achieved earnings per share (EPS) of $1.73, surpassing analyst forecasts of $1.64, and reported revenue of $1.44 billion, exceeding the anticipated $1.41 billion. Despite these positive results, RBC Capital Markets adjusted its outlook on Texas Roadhouse shares, reducing the price target to $180 from $200, while maintaining a Sector Perform rating. This adjustment followed concerns about underlying demand trends and inflationary pressures that could affect future profit margins.
Similarly, Truist Securities reduced Texas Roadhouse’s price target from $209 to $205 but maintained a Buy rating, citing strong underlying trends despite challenges from weather conditions and commodity inflation. Stifel also lowered its price target to $172 from $185, keeping a Hold rating, after Texas Roadhouse reported a slight deceleration in sales momentum in the first quarter of 2025. Benchmark maintained a Hold rating, reflecting a steady outlook on the company’s prospects.
Analysts have raised concerns about higher commodity and wage inflation, which are expected to squeeze profit margins in the coming years. Texas Roadhouse has updated its fiscal year 2025 guidance, increasing commodity inflation expectations due to anticipated tighter cattle supplies. Despite these challenges, the company plans to open approximately 30 new company-owned restaurants in 2025 and has announced an 11% increase in its quarterly dividend and a new $500 million share repurchase program.
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