On Friday, Citi reiterated its Buy rating on Texas Roadhouse (NASDAQ:TXRH) with a steadfast price target of $191.00. The company's shares have seen a significant upswing, boasting an approximate 35% increase year-to-date, and expectations are set for this momentum to persist following second-quarter results.
Texas Roadhouse has managed to outperform in a sector where many are grappling with driving customer traffic and boosting sales. The analyst noted the restaurant chain's success in attracting customers and witnessing robust trends in spending per visit.
Texas Roadhouse's consistency and value proposition are seen as key factors in shielding the company from wider market downturns. While the cost of beef poses a challenge to the company's goal of achieving 17-18% restaurant-level margins by 2025, improvements in labor efficiency are helping.
Additionally, the sustained influx of customers and the opening of new locations are anticipated to drive low double-digit growth in earnings before interest, taxes, depreciation, and amortization (EBITDA). These factors contribute to the firm's stance that Texas Roadhouse warrants a higher valuation compared to its industry counterparts and historical averages.
In other recent news, Texas Roadhouse has been a focal point of various financial firms. UBS has reaffirmed its Buy rating on Texas Roadhouse, maintaining a price target of $185.00, based on the restaurant chain's strong value proposition and sustained sales momentum.
The firm anticipates solid margin gains and earnings growth throughout 2024. Furthermore, Texas Roadhouse demonstrated impressive growth in Q1 2024, with revenue exceeding $1.3 billion and an 8.4% increase in same-store sales.
Truist Securities adjusted its price target for Texas Roadhouse to $183 from $181, while reaffirming a Buy rating. In addition, the company successfully opened six new stores during the second quarter of 2024. RBC Capital increased its price target on Texas Roadhouse to $175 from $165, while retaining a Sector Perform rating.
Stifel raised its price target for Texas Roadhouse shares to $175 from $155, maintaining a Hold rating. The company also announced a cash dividend of $0.61 per share, payable to shareholders of record as of June 12, 2024.
InvestingPro Insights
As Texas Roadhouse (NASDAQ:TXRH) garners a positive outlook from analysts, InvestingPro data provides a deeper dive into the company's financial health and market performance. With a market capitalization of $11.22 billion and a P/E ratio standing at 33.78, the company is recognized for its robust revenue growth over the last twelve months, marking a 13.73% increase. This growth trajectory is further evidenced by a quarterly revenue growth of 12.51% as of Q1 2024. Additionally, the company's EBITDA growth of 15.2% in the same period underscores its operational strength.
InvestingPro Tips highlight that Texas Roadhouse has raised its dividend for 3 consecutive years, signaling confidence in its financial stability and commitment to shareholder returns. Moreover, the stock has experienced a large price uptick over the last six months, with a 44.55% total return, reflecting investor optimism. These metrics are particularly relevant for investors considering the company's value proposition and growth prospects. For those looking to explore further insights and tips, InvestingPro offers additional information that can guide investment decisions. Use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, and find out about the 14 additional InvestingPro Tips available for Texas Roadhouse at https://www.investing.com/pro/TXRH.
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