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Investing.com - Goldman Sachs has reiterated its Neutral rating and $200.00 price target on Texas Roadhouse (NASDAQ:TXRH) following the restaurant chain’s second-quarter results. According to InvestingPro data, the stock currently trades at $185.01, with analyst targets ranging from $165 to $220.
The company reported better-than-expected top-line performance with system-wide same-store sales growth of 6.1%, exceeding both Goldman Sachs and consensus estimates of 4.9% and 5.2%, respectively. The strong performance aligns with the company’s impressive 15.09% revenue growth over the last twelve months. Despite the sales beat, Texas Roadhouse missed adjusted EBITDA projections, delivering $197 million versus expectations of $201 million, though total EBITDA for the last twelve months stands at $704.64 million.
Higher commodity inflation, particularly beef costs, impacted profitability with commodity costs rising 5.2% during the quarter. This marks the third consecutive quarter that Texas Roadhouse has raised its annual commodity inflation guidance, creating near-term restaurant-level margin pressures. InvestingPro analysis reveals the company suffers from weak gross profit margins, currently at 18.56%. For deeper insights into Texas Roadhouse’s financial health and additional ProTips, subscribers can access the comprehensive Pro Research Report.
Management noted plans to accelerate unit growth for its smaller brands, Bubba’s 33 and Jaggers, while continuing to acquire franchisee units in coming quarters. The company also observed customers trading up to more expensive entrees despite a continued mix drag from reduced alcohol sales.
Goldman Sachs cited the company’s sensitivity to beef costs in its primarily company-owned model and sees a balanced bull/bear debate on the stock, supporting its decision to maintain the Neutral rating.
In other recent news, Texas Roadhouse reported its second-quarter financial results, which revealed a mixed performance. The company posted earnings per share of $1.86, which fell short of the $1.91 expected by analysts. However, the restaurant chain experienced a 12.7% year-over-year increase in revenue, reaching $1.51 billion, slightly surpassing the consensus estimate of $1.5 billion. Comparable restaurant sales saw a 5.8% increase at company-owned locations, attributed to positive customer traffic across all three of its brands. These developments highlight the company’s ability to grow revenue despite missing earnings expectations.
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