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Texas Roadhouse (TXRH) posted a solid beat on February 20 and that made analysts revise their estimates higher. Thanks to the beat, the stock is a Zacks Rank #1 (Strong Buy) and today it is the Bull of the Day. Let's take a closer look at the beat and why this stock has the highest Zacks Rank.
Description
Texas Roadhouse operates casual dining restaurants in the United States and internationally. The company operates and franchises Texas Roadhouse and Bubba's 33 restaurants. As of June 25, 2019, it owned and operated approximately 498 restaurants and franchised an additional 93 restaurants. Texas Roadhouse, Inc. was founded in 1993 and is based in Louisville, Kentucky.
Recent Earnings Report
After the close on February 20, TXRH posted earnings per share of $0.61 and that was $0.09 ahead of the Zacks Consensus Estimate. Revenues came in at $725.2M, an increase of 19% from the prior year and also beat estimates.
Earnings History
This was the third consecutive beat for TXRH, and each beat has been better than the last. The first time the company topped the Zacks Consensus Estimate there was a positive earnings surprise of 1.6%. The next beat was much better coming in at 13% ahead of the consensus. The most recent beat as 17% ahead of the estimate and investors love to see bigger beats.
Estimate Revisions
Estimates have all moved higher following the recent beat. The current quarter has jumped from $0.80 to $0.85. Next quarter has a two cent move as well.
The full year numbers for TXRH are moving higher as well. The 2020 Zacks Consensus Estimate jumped from $2.57 to $2.72. The 2021 number also moved higher to $3.01 from $2.81 over the past week.
Valuation
At 24x forward earnings, TXRH is not a cheap stock. Value investors will probably take a pass on this stock as it has a 4.9x price to book multiple. TXRH just posted 19% topline growth, but the price to sales multiple is only 1.6x. I see good growth in margins over the last three quarters and given the pull back in the broader market investors should give this stock a deeper look.
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