Texas Roadhouse stock holds steady as BMO reiterates Market Perform

Investing.com - BMO Capital has reiterated its Market Perform rating on Texas Roadhouse (NASDAQ:TXRH) while maintaining its $170.00 price target on the restaurant chain’s stock. According to InvestingPro data, the company currently trades near its Fair Value, with a market capitalization of $12.3 billion and impressive revenue growth of 15% over the last twelve months.

The company reported second-quarter earnings per share of $1.86, missing consensus estimates by $0.05, primarily due to unfavorable restaurant margins in cost of goods sold. This was partially offset by modest comparable sales growth of 5.8%, which exceeded expectations by 50 basis points. InvestingPro data shows the company’s gross profit margin stands at 18.6%, confirming the margin pressure, though the company maintains a "GREAT" overall financial health score.

Quarter-to-date comparable sales have slowed to 5.3%, running 50 basis points below consensus estimates. Texas Roadhouse estimates a 60 basis point headwind from the calendar shift for the Fourth of July holiday.

The restaurant chain has updated its 2025 guidance, raising food inflation projections to 5% from 4% due to beef costs, while making slightly favorable revisions to labor and tax rate forecasts.

BMO Capital maintains its price target of $170, reflecting a multiple premium for Texas Roadhouse’s outperformance in a challenging macroeconomic environment, but remains cautious due to margin risks associated with cattle herd rebuilding.

In other recent news, Texas Roadhouse reported its second-quarter earnings, revealing a mixed financial performance. The company achieved a revenue increase of 12.7% year-over-year, reaching $1.51 billion, surpassing the consensus estimate of $1.5 billion. However, earnings per share fell short of expectations, coming in at $1.86 compared to the analyst estimate of $1.91. Despite the earnings miss, Texas Roadhouse demonstrated strong same-store sales growth, with a 5.8% increase in the second quarter and a 5.3% rise in the third quarter to date. Analysts at Evercore ISI maintained an Outperform rating with a price target of $190, citing the company’s robust sales growth. Goldman Sachs reiterated a Neutral rating with a $200 price target, noting the better-than-expected top-line performance but highlighting the miss on adjusted EBITDA projections. Texas Roadhouse’s system-wide same-store sales growth of 6.1% exceeded both Goldman Sachs and consensus estimates. These developments underscore the restaurant chain’s ability to maintain sales momentum despite some earnings challenges.

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