On Friday, Texas Roadhouse Inc. (NASDAQ:TXRH) saw its price target increased by Deutsche Bank from $168.00 to $190.00, while the firm reaffirmed its Buy rating on the stock.
According to the analyst from Deutsche Bank, Texas Roadhouse has proven itself as a standout performer in its sector, exhibiting both remarkable consistency and outperformance.
The restaurant chain's first-quarter same-store sales (SSS) growth was 8.4%, with customer traffic rising by 4.3%. These figures are expected to be among the highest this quarter within the restaurant industry. Additionally, the momentum has carried into April, with same-store sales growing by 9.3% and traffic increasing by 4.6%.
The company's restaurant-level margin (RLM) was notably 17.4% in the first quarter, which is an increase of approximately 150 basis points. This marks the first time Texas Roadhouse has achieved a 17% margin since the first half of 2021, reinforcing the expectation of a return to long-term RLM of 17-18%.
The analyst highlighted that Texas Roadhouse's strong performance is partly due to productivity gains, as labor hours have grown at roughly 25% of the rate of traffic, and a moderation in cost pressures. With these factors in mind, Deutsche Bank believes that Texas Roadhouse deserves to command a premium in the market.
The positive outlook is also supported by the company's clean balance sheet and the potential for upward earnings revisions. The analyst concluded by emphasizing the scarcity of U.S.-based companies that consistently execute well, which adds to the positive sentiment surrounding Texas Roadhouse.
InvestingPro Insights
Following the optimistic assessment by Deutsche Bank, real-time data from InvestingPro provides a comprehensive financial picture of Texas Roadhouse Inc. (NASDAQ:TXRH). The company's market capitalization stands at a robust $10.5 billion, reflecting its substantial presence in the industry. With a P/E ratio of 34.57 and a PEG ratio of 2.4, the stock is trading at premium valuation multiples, suggesting high expectations for future earnings growth.
Texas Roadhouse has demonstrated revenue growth of 13.73% over the last twelve months as of Q1 2024, indicating a strong trajectory in sales performance. Moreover, the company has maintained a steady dividend yield of 1.55%, with a notable dividend growth rate of 32.61% in the same period, underscoring its commitment to returning value to shareholders.
InvestingPro Tips highlight that Texas Roadhouse has raised its dividend for 3 consecutive years and that 8 analysts have revised their earnings upwards for the upcoming period, which may signal confidence in the company's future performance. For investors seeking more in-depth analysis, there are additional tips available on InvestingPro, including insights on the company's trading multiples and profitability predictions. To access these insights and more, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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