Benchmark Co. analyst Todd Brooks has maintained their neutral stance on TXRH stock, giving a Hold rating on May 9.
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Todd Brooks has given his Hold rating due to a combination of factors impacting Texas Roadhouse’s financial outlook. The company reported first-quarter revenues that surpassed expectations, driven by strong same-store sales (SSS) growth, particularly following a weather-affected February. However, this positive revenue performance was offset by weaker restaurant-level operating margins (RLOM) and earnings per share (EPS) that fell short of consensus estimates.
Despite the encouraging sales trends, Texas Roadhouse faces increasing cost pressures, particularly from commodity inflation, which has led to a revised outlook. The company anticipates higher food costs, especially in beef and seafood, due to strong demand and potential tariff impacts. Additionally, while the past years have seen significant improvements in restaurant-level profitability, the current year is expected to see more stable or slightly improved results. These mixed signals of strong sales but rising costs and margin pressures contribute to the Hold rating at the current valuation.
In another report released on May 9, Barclays also maintained a Hold rating on the stock with a $175.00 price target.