Texas Roadhouse (TXRH)
Lookin' mighty tasty!
Texas Roadhouse
I originally wrote about TXRH 0.00%↑ in late January of this year. At that time, the stock was trading for about $180 per share, and since then the stock has risen a little more than 8%. Let’s take a look at the company’s most recent earnings report, as well as the current valuation and try to ascertain which way the company might be trending. One quick note, soon after I released the original Substack post on TXRH 0.00%↑ the company announced a dividend increase of 11.5%, from $0.61 per quarter to $0.68.
Q1 2025 Earnings
In early May, the company announced their Q1 2025 earnings with mixed results. GAAP EPS was $1.70 per share, coming up $0.06 short of analyst expectations, on revenue of $1.45B, which beat the consensus by $10M, and was a 9.6% YoY increase.
Revenue
Comparable restaurant sales rose 3.5% at company-owned locations.
Average weekly sales per company restaurant was $163,071, up 2.3% compared to same time period a year ago.
Of that $163K figure, approximately $22K were to-go sales, up about 7% from last year.
Additional Financial Measures
Restaurant margin dollars grew to $239.3M, a 4.7% increase thanks to higher revenue.
The operating margin shrank 0.77%, to 16.6%, as a result of commodity price increases of 2.1%, coupled with an increase in employee costs of 4.6%.
Diluted EPS increased 1.0% with share repurchases and higher margin dollars playing a big role, but was partially offset by higher depreciation and SG&A costs.
Capital Allocation/Other Metrics
The company opened 7 new Texas Roadhouse locations along with 1 Bubba’s 33 location (50th location).
TXRH 0.00%↑ spent $77.4M on capital expenditures during the quarter.
Acquired $78.3M worth of franchise locations.
Paid $45.2M in dividends and repurchased more than $50M in common stock.
2025 Outlook
Management implemented a 1.4% price increase in early April.
Commodity costs are expected to rise 4% this year.
Projected comparable restaurant sales growth.
Store week growth of around 5%.
Employee costs expected to rise between 4% and 5%.
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Valuation
As always, the last piece of this puzzle is to determine if the company is currently trading for an attractive valuation. Looking back at the original write-up the stock was trading for an 18% premium to its fair value.