On Friday, Truist Securities updated its outlook on Texas Roadhouse (NASDAQ: NASDAQ:TXRH) shares, raising the steakhouse chain's price target from $202.00 to $207.00 while maintaining a Buy rating. The adjustment follows the company's third-quarter financial results for 2024, which included a tax-driven earnings per share (EPS) miss but surpassed consensus estimates for same-store sales (SSS).
The positive revision was influenced by Texas Roadhouse's robust third-quarter same-store sales and an uptick in customer traffic in October, despite challenging comparisons from the previous year. The analyst from Truist Securities highlighted the restaurant's competitive edge, attributing its success to quality, value, and service, which resonate well with consumers in the current market.
Amid concerns over potential commodity inflation in 2025 that could be higher than the company's guidance, Truist Securities anticipates that the impact could be mitigated by continued customer traffic growth and the possibility of more aggressive menu pricing in the spring.
The firm also noted that Texas Roadhouse's earnings projections for 2025 are buoyed by the acquisition of franchise stores, a strategy that is expected to complement the company's solid development plans.
The acquisitions are seen as an ongoing opportunity that could contribute to the company's growth. Texas Roadhouse's strategic moves, including menu pricing adjustments and expansion through acquisitions, are key factors that led to the revised price target, reflecting the analyst's confidence in the company's future performance.
In other recent news, Texas Roadhouse has been the subject of several analyst reports. Baird maintained an Outperform rating on Texas Roadhouse and increased the price target to $205, citing the company's solid earnings performance and robust start to the fourth quarter.
UBS also maintained a Buy rating, raising its price target from $200 to $210, highlighting the company's strong same-store sales momentum and favorable guidance for 2025.
Despite robust sales growth, Texas Roadhouse's third-quarter earnings fell short of analyst expectations, with adjusted earnings per share of $1.26, missing the consensus of $1.32. However, revenue met estimates at $1.27 billion, marking an 8.5% year-on-year increase. Notably, comparable restaurant sales rose by 8.5% at company-owned locations and 7.2% at domestic franchises.
The company's future expectations include a projected 5% store week growth and commodity inflation of 2% to 3% for 2025. Texas Roadhouse also announced plans for the opening of approximately 30 company-owned units and the acquisition of 13 franchise units, which are significant recent developments. These updates reflect the company's focus on sustaining traffic momentum and monitoring beef trends and labor costs in the coming year.
InvestingPro Insights
Texas Roadhouse's strong market position, as highlighted in the article, is further supported by recent InvestingPro data and tips. The company's revenue growth of 13.8% over the last twelve months and 14.51% in the most recent quarter aligns with the analyst's positive outlook on same-store sales performance.
An InvestingPro Tip reveals that Texas Roadhouse has raised its dividend for 3 consecutive years, indicating financial stability and a commitment to shareholder returns. This is particularly relevant given the article's focus on the company's growth strategies and performance metrics.
Another InvestingPro Tip notes that 9 analysts have revised their earnings upwards for the upcoming period, which corroborates Truist Securities' optimistic stance on the company's future performance. This upward revision in earnings expectations could be linked to the company's strategic acquisitions and development plans mentioned in the article.
It is worth noting that Texas Roadhouse is trading near its 52-week high, with a price-to-earnings ratio of 32.87, suggesting investor confidence in the company's growth prospects. The company's market capitalization stands at $12.06 billion, reflecting its significant presence in the restaurant industry.
For investors seeking a more comprehensive analysis, InvestingPro offers 16 additional tips for Texas Roadhouse, providing a deeper understanding of the company's financial health and market position.
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