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Investing.com - Evercore ISI has reiterated an Outperform rating on Texas Roadhouse (NASDAQ:TXRH) with a price target of $190.00, according to a research note released Friday. The restaurant chain, currently valued at $12.27 billion, maintains a "GREAT" financial health score according to InvestingPro analysis, with seven analysts recently revising earnings estimates upward.
The restaurant chain continues to demonstrate strong same-store sales growth, with second-quarter results showing a 5.8% increase and third-quarter quarter-to-date figures at 5.3%. This growth reflects a balanced mix of traffic growth (approximately 4%) and modest pricing adjustments, contributing to impressive revenue growth of 15.09% over the last twelve months.
Evercore ISI estimates that the third quarter might represent a peak for near-term food margin headwinds, which are up 175 basis points year-over-year, assuming over 7% inflation and 2.3% pricing. The firm has trimmed its 2025 earnings per share estimate to $6.47, down from a previous estimate of $6.52, compared to consensus estimates of $6.69.
The research firm views Texas Roadhouse’s decision to price below inflation as an investment in value and sustainable growth. Evercore remains optimistic about the potential for over 10% long-term earnings per share growth as the restaurant chain returns to margins exceeding 17% amid normalized beef costs.
The $190 price target represents 26 times Evercore’s 2026 earnings per share estimate, compared to the company’s five-year average price-to-earnings ratio range of 21 to 27 times. According to InvestingPro data, Texas Roadhouse currently trades at a P/E of 28.22x while maintaining a 15-year streak of consistent dividend payments, with 11.48% dividend growth in the last year. Get access to the full Texas Roadhouse research report and discover 10+ additional ProTips with an InvestingPro subscription.
In other recent news, Texas Roadhouse reported second-quarter financial results, revealing a mixed performance. The restaurant chain posted a revenue increase of 12.7% year-over-year, reaching $1.51 billion, which slightly surpassed the consensus estimate of $1.5 billion. However, the company’s earnings per share fell short of expectations, coming in at $1.86 compared to the anticipated $1.91. Despite the revenue beat, Texas Roadhouse’s adjusted EBITDA was $197 million, missing the projections of $201 million. Comparable restaurant sales saw a 5.8% increase at company-owned locations, boosted by positive traffic across all three of its brands. In light of these results, Goldman Sachs maintained its Neutral rating on Texas Roadhouse, with a price target of $200. The firm noted the company’s better-than-expected system-wide same-store sales growth of 6.1%, which exceeded both its own and consensus estimates. These developments highlight the company’s ongoing efforts to drive sales amid challenging market conditions.
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