Texas Roadhouse's steaks have been drawing customers and investors alike, and now shares of the restaurant chain are trying to break out from a flat base. That's why Texas Roadhouse is today's selection for IBD 50 Stocks To Watch.
Sales and earnings growth has been steady over the past eight quarters at the Louisville, Ky.-based company, capped by a big run this year. The stock has rallied 46% thus far in 2024 as of Wednesday's closing price.
Shares currently are trying to poke through a buy point of 177.72, according to IBD MarketSurge. The stock ventured into the buy zone when it hit an all-time intraday high of 180.69 on Sept. 26.
Here's the breakdown on the recent performance for Texas Roadhouse stock: Sales grew 15% to $1.3 billion in the second quarter while earnings of $1.79 per share rose 47% from the prior year. Same-store sales rose 9.3% at company-owned locations and by 8.3% in domestic franchises during the quarter.
Improving Margins For The Right Reasons
Perhaps more importantly, margins improved for the right reasons, namely higher sales and larger average guest checks. Increases in labor productivity also helped offset inflationary pressures during the quarter.
But wage inflation was a scorching 4.4% during the quarter, though inflation in commodities eased to 0.4%. Looking forward, the company plans on leveraging menu pricing as it continues to battle wage inflation.
The casual dining chain operator plans to announce third-quarter results on Oct. 24. Analysts polled by FactSet expect earnings of $1.31 per share on sales of $1.3 billion.
Analysts expect annual profit increases for 2024 and 2025. In 2024, earnings are seen rising 40% to $6.34 per share. In 2025, they expect a 9% increase to $6.91 per share.
Texas Roadhouse Stock Ranks First In Group
Texas Roadhouse ranks first in the retail restaurants group. Its Composite Rating is a nearly ideal 98 while the EPS Rating of 96 is also high.
The company's Relative Strength Rating of 90 shows that the stock has outperformed the majority of stocks in the Investors' Business Daily database over the past 12 months.
Mutual funds own 59% of outstanding shares. More funds have been net buyers in the past two quarters.
The Columbia Small Cap Growth Fund(CMSCX) and the Invesco Discovery Fund(OPOCX) hold shares of Texas Roadhouse stock.
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