On Friday, BMO Capital Markets adjusted its outlook on Texas Roadhouse (NASDAQ:TXRH) shares, raising the price target to $155 from $145, while keeping a Market Perform rating on the stock. The adjustment follows Texas Roadhouse's second-quarter earnings per share (EPS) of $1.79, which surpassed the consensus by $0.15.
The company's performance was notably driven by robust comparable sales (comps) and healthy restaurant margins, marking the third consecutive quarter of such trends. Texas Roadhouse has reported a quarter-to-date comp increase of 8.0%, which is ahead of the consensus expectations, signaling a positive divergence from the broader industry trends.
Despite the upbeat results, Texas Roadhouse has made some adjustments to its 2024 guidance. While the outlook for food inflation was lowered to 2% from the previous estimate of 3%, capital expenditure forecasts were increased to approximately $365 million from $345 million. Additionally, the projected growth in store weeks has been revised downward to about 7.5% from an earlier estimate of around 8.0%.
The financial institution has raised its estimates based on these recent results and the updated guidance provided by Texas Roadhouse. However, the firm has opted to maintain a neutral stance on the stock, citing that the current share price already reflects the positive developments, and there are ongoing macroeconomic concerns that could affect the company's future performance.
In other recent news, Texas Roadhouse Inc. has reported significant growth in its second quarter performance, with a 9.3% increase in same-store sales and a notable rise in revenue, surpassing $1.3 billion. Analysts from Stephens have responded to this performance by maintaining an Equal Weight rating on the stock and increasing the price target from $170.00 to $176.00.
The company's robust earnings per share and restaurant margins have exceeded consensus forecasts, while its commodity inflation guidance has been reduced to approximately 2%.
Texas Roadhouse's recent performance is marked by the opening of six new restaurants during the quarter, with plans to open approximately 30 company-owned restaurants throughout the year.
This development comes alongside a 14.5% increase in Q2 revenue and a 46.4% rise in diluted earnings per share. The company, according to Stephens, is navigating market dynamics effectively while focusing on maintaining its strong performance and managing costs.
The company's future expectations include a 4% earnings per share growth for the full year 2024. Texas Roadhouse also highlighted the strong performance of the Bubba's brand and its technology initiatives, which include digital kitchens and potential new customer experience enhancements. These recent developments are part of Texas Roadhouse's strategy to navigate industry challenges and maintain momentum in the face of commodity and labor inflation.
InvestingPro Insights
As Texas Roadhouse (TXRH) continues to serve up strong financial performance, real-time data from InvestingPro provides further insight into the company's market position. With a robust market capitalization of $11.09 billion, the company is trading at a high earnings multiple, with a P/E ratio of 30.13 and an adjusted P/E ratio for the last twelve months as of Q1 2024 at 33.39. This reflects a premium valuation which may be attributed to the company's consistent revenue growth, which stands at 13.73% for the last twelve months as of Q1 2024.
One of the key InvestingPro Tips highlights that Texas Roadhouse has raised its dividend for three consecutive years, showcasing a commitment to returning value to shareholders. Additionally, 11 analysts have revised their earnings upwards for the upcoming period, indicating a positive outlook on the company's future profitability. For readers interested in a deeper dive into Texas Roadhouse's financials and strategic positioning, InvestingPro offers additional tips and metrics. By using the coupon code PRONEWS24, readers can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, gaining access to an extensive array of InvestingPro Tips—there are 15 more tips available for Texas Roadhouse that could provide valuable insights for potential investors.
Overall, the data and tips from InvestingPro suggest that while Texas Roadhouse is trading at higher valuation multiples, it has a track record of profitability and growth that may interest investors looking for solid performance in the restaurant industry.
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