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Investing.com - Raymond (NSE:RYMD) James has reiterated its Market Perform rating on Texas Roadhouse (NASDAQ:TXRH), a $12.27 billion restaurant chain currently trading above its InvestingPro Fair Value, following mixed second-quarter results.
The firm noted that Texas Roadhouse delivered strong comparable sales growth of 5.8% with traffic increasing by 4.0%, building on its impressive 15.09% revenue growth over the last twelve months. However, these positive results were offset by higher cost of goods sold and lower store margins of 17.1%, which fell short of Raymond James’ expectation of 17.6%.
Raymond James highlighted that Texas Roadhouse’s sales outlook remains favorable, supported by strong comparable sales, accelerating unit growth at the company’s Bubba’s concept, and additional franchise acquisitions, including eight locations in the fourth and first quarters. InvestingPro data shows the company maintains strong financial health with a GREAT overall score, suggesting solid execution of its growth strategy.
Despite the positive sales trajectory, Raymond James expressed caution about limited year-over-year earnings per share growth in 2025, projecting store margins to decline by nearly 100 basis points compared to the previous year.
The firm also raised concerns about beef inflation and margins extending into 2026, noting that U.S. beef supplies remain tight with no evidence yet that the herd rebuild process has begun, as heifer slaughter remains elevated.
In other recent news, Texas Roadhouse reported its second-quarter 2025 earnings, showcasing a mixed performance. The company’s earnings per share (EPS) came in at $1.86, slightly below the anticipated $1.91. However, revenue exceeded expectations, reaching $1.51 billion compared to the forecasted $1.5 billion. This revenue beat indicates stronger-than-expected sales performance. Despite the earnings miss, the revenue growth reflects positive business momentum. Analyst firms have not yet provided any upgrades or downgrades following these results. Investors may find the revenue figures encouraging, as they suggest underlying business strength. These developments highlight the company’s recent financial activities.
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