On Monday, Truist Securities adjusted its price target for shares of Texas Roadhouse (NASDAQ:TXRH), a popular steakhouse chain, to $183 from $181, while reaffirming a Buy rating on the stock. The firm's analyst noted that Texas Roadhouse is on track with its second-quarter company store openings, aligning with both guidance and the consensus estimates.
Texas Roadhouse successfully opened six new company stores during the second quarter of 2024, consisting of three Texas Roadhouse locations and three Bubba's 33 restaurants. This expansion follows the company's projections and meets industry expectations. The openings were slightly concentrated towards the end of the quarter, with the Texas Roadhouse sites operating for an average of 8.1 weeks and the Bubba's locations for 3.5 weeks.
Despite Bubba's 33 restaurants generating approximately 20-25% lower unit volumes compared to Texas Roadhouse, the impact on second-quarter sales was minimal. The analyst highlighted that Texas Roadhouse inaugurated its first restaurant of the third quarter on July 1, 2024, in Lake Park, Florida, and maintains a robust pipeline of new locations expected to open through the fall.
Looking ahead, the company is forecasted to open one additional Bubba's 33 restaurant in 2024, although hiring for this location has not yet commenced. Truist Securities anticipates a total of 30 new company store openings for Texas Roadhouse in 2024, which is consistent with the company's own guidance and slightly below the consensus estimate of 31 new stores.
In other recent news, Texas Roadhouse reported robust Q1 2024 results, with revenue exceeding $1.3 billion and an 8.4% increase in same-store sales. The company's operating cash flow surpassed $240 million, a portion of which was allocated to dividends, share repurchases, and capital expenditures. Texas Roadhouse also announced a cash dividend of $0.61 per share, payable to shareholders of record as of June 12, 2024.
The company's growth strategy includes the opening of six new company-owned restaurants next quarter and approximately 30 new locations throughout the year. RBC Capital and Stifel, both financial services firms, have increased their price targets for Texas Roadhouse shares to $175, maintaining their respective ratings of Sector Perform and Hold.
Texas Roadhouse is also advancing its technological capabilities with initiatives such as Digital Kitchens and the upcoming Roadie-First Technology system.
InvestingPro Insights
Truist Securities' positive outlook on Texas Roadhouse (NASDAQ:TXRH) is echoed by the recent InvestingPro Tips, which highlight that the company has maintained dividend payments for 14 consecutive years and has raised its dividend for 3 consecutive years. Such consistency in returning value to shareholders can be attractive to investors looking for stable income streams. Additionally, the company has seen a high return over the last year, with a 55.68% one-year price total return, indicating strong market performance.
InvestingPro Data shows Texas Roadhouse with a robust market capitalization of $11.47 billion and a price-to-earnings (P/E) ratio of 34.6, which, while indicating a high valuation, may reflect investor confidence in the company's growth prospects. Furthermore, the company's revenue growth remains solid, with a 13.73% increase over the last twelve months as of Q1 2024. These financial metrics suggest that Texas Roadhouse is maintaining a strong financial position in the market.
For readers interested in a deeper analysis, there are 25 additional InvestingPro Tips available, which can help provide a more comprehensive understanding of Texas Roadhouse's financial health and market position. To explore these insights, visit https://www.investing.com/pro/TXRH. Plus, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking even more expert financial analysis.
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