Texas Roadhouse (TXRH) dipped Friday then rebounded after the company delivered some decent top and bottom-line figures for its fourth quarter but warned on some inflation and weather-related traffic problems in the current quarter.
Discover the Best Stocks and Maximize Your Portfolio:
- See what stocks are receiving strong buy ratings from top-rated analysts.
- Filter, analyze, and streamline your search for investment opportunities with TipRanks’ Stock Screener.
In the earnings call, the steak restaurant chain noted the “negative impact from snow causing store closures” during the current quarter, but stressed it was not trying to measure the overall impact on sales.
Meanwhile the company says it anticipates wage inflation of 4-5% and raised its expected commodity inflation to a range of 3-4%, chiefly on more expensive beef due to expectations for tighter supply.
Tariff Question Hangs Over TXRH
Food price inflation has been high on the agenda for a number of corporate earnings calls, as has the threat of tariffs, and TXRH said it too is “paying attention” to any potential impact from tariffs on Mexico or Canada.
“We are trying to keep our ear to the ground and be aware of anything that would have an impact in the business in any way, shape or form.” said CEO Gerry Morgan.
Food prices rose 2.5% year-on-year in January, according to the most recent inflation report from the U.S. Bureau of Labor Statistics, while the price of eggs has been cracking new highs and making headlines in the process.
But there are concerns that food price inflation could rise due to tariffs. “As the Trump Administration reevaluates trade policies, we are closely monitoring the impacts tariffs will have on food and beverage pricing, domestic sourcing options, and menu adaptation,” the National Restaurant Association said earlier this month.
Immigration policy could also impact labor availability and wage inflation, though TXRH said the 4-5% increase in staff costs was driven by state mandated wage increases, the impact of the recently completed franchise acquisition and higher benefits expense.
TXRH Earnings Beat
Fiscal fourth quarter revenues rose to $1.44 billion, ahead of estimates, while earnings per share (EPS) reached $1.73, surpassing analysts’ forecasts of $1.64.
Comparable sales increased 7.7% in the fourth quarter driven by 4.9% traffic growth and a 2.8% increase in average spend, which helped margins.
TXRH saw full-year revenue of $5.4 billion and an average unit volume exceeding $8 million for the first time in 2024 while it opened 31 company-owned restaurants and acquired 13 franchise restaurants.
Is TXRH a Good Stock to Buy?
Overall, Wall Street has a Moderate Buy consensus rating on TXRH stock, based on eight Buys and seven Holds. The average TXRH price target of $202.20 implies about 18% upside from current levels.
