On Tuesday, Truist Securities adjusted its outlook on shares of Texas Roadhouse (NASDAQ:TXRH), increasing the price target to $168 from the previous target of $152. The firm has maintained a Buy rating on the stock. The new price target represents a valuation based on a price-to-earnings (P/E) multiple of 28 times the estimated earnings per share (EPS) for the year 2025.
The adjustment comes after Truist Securities updated its earnings per share estimate for Texas Roadhouse for the year 2024 to $5.80, a slight increase from the prior estimate of $5.78. The firm's forecast for the 2025 EPS remains unchanged at $6.41. The rationale behind the increased price target is tied to the company's strong positioning within the current macroeconomic environment.
Texas Roadhouse's new price target is set at a premium compared to its pre-COVID three-year average P/E multiple of 24.4 times. This premium acknowledges the restaurant chain's advantageous market position in light of current economic conditions. The target is also discounted back nine months, aligning the valuation with a forward-looking perspective.
The update from Truist Securities signals confidence in Texas Roadhouse's performance and its ability to navigate the market landscape effectively. The Buy rating suggests that the firm views the stock as a potentially profitable investment for its clients. The increased price target and maintained earnings estimates indicate a positive outlook for Texas Roadhouse's financial growth in the coming years.
InvestingPro Insights
In light of Truist Securities' revised price target for Texas Roadhouse (NASDAQ:TXRH), current InvestingPro data and tips offer additional context for investors considering the stock. The company boasts a robust market capitalization of $10.37 billion, which underscores its significant presence in the restaurant industry. Despite a high P/E ratio of 33.88, which exceeds the industry average, investors are drawn to the company's strong revenue growth of 15.36% over the last twelve months as of Q1 2023. This growth metric aligns with the optimistic earnings projections from Truist Securities.
InvestingPro Tips suggest that Texas Roadhouse has demonstrated a commitment to shareholder returns, having raised its dividend for three consecutive years, with a notable dividend growth of 32.61% in the last twelve months. Additionally, the company has maintained dividend payments for 14 consecutive years, which may appeal to income-focused investors. However, the stock is currently trading near its 52-week high, at 98.75% of this peak, which could indicate a need for caution among investors considering entry points.
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