Stock Update (NASDAQ:TXRH): Texas Roadhouse Inc Announces Second Quarter 2015 Results


Texas Roadhouse Inc (NASDAQ:TXRH) announced financial results for the 13 and 26 week periods ended June 30, 2015.

Results for the second quarter included the following highlights:

  • Comparable restaurant sales increased 8.2% at company restaurants and 6.9% at franchise restaurants;
  • Restaurant margin, as a percentage of restaurant sales, decreased 193 basis points to 16.2%. Food cost inflation of approximately 9.4%, mostly driven by beef, more than offset the impact of higher average unit volume;
  • Diluted earnings per share decreased 8.5% to $0.30 from $0.33 in the prior year;
  • Nine company-owned restaurants were opened, including two Bubba’s 33 restaurants; and,
  • The Company repurchased 88,089 shares of its common stock for $3.1 million.

Results for year-to-date included the following highlights:

  • Comparable restaurant sales increased 8.5% at company restaurants and 7.5% at franchise restaurants;
  • Restaurant margin, as a percentage of restaurant sales, decreased 106 basis points to 17.6%. Food cost inflation of approximately 7.4%, mostly driven by beef, more than offset the impact of higher average unit volume;
  • Diluted earnings per share increased 8.2% to $0.76 from $0.70 in the prior year;
  • 12 company-owned restaurants were opened, including three Bubba’s 33 restaurants; and,
  • The Company repurchased 88,089 shares of its common stock for $3.1 million.

 

Second Quarter Year to Date
($000’s) 2015 2014 % Change 2015 2014 % Change
Total revenue $ 454,698 $ 395,363 15 $ 914,928 $ 792,505 15
Income from operations 31,696 34,401 (8 ) 80,296 74,585 8
Net income 21,138 23,081 (8 ) 53,430 49,546 8
Diluted EPS $ 0.30 $ 0.33 (9 ) $ 0.76 $ 0.70 8

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, “We are pleased to report strong sales momentum through the second quarter, as we generated double digit revenue gains driven by increasing guest counts and strong operating week growth. In spite of this solid top-line performance, commodity inflation of 9.4% resulted in earnings per share that were lower than the prior year period as it more than offset modest price increases taken in late 2014.”

Taylor continued, “On the development front, our new restaurants continue to open with strong sales and we now expect to open approximately 30 company-owned restaurants in 2015. We remain focused on providing legendary food and legendary service, as well as a great value proposition to each and every guest, and as a result, we believe we are well-positioned for growth over the long-term.”

2015 Outlook

The Company reported that comparable restaurant sales at company restaurants for the first four weeks of its third quarter of fiscal 2015 increased approximately 7.6% compared to the prior year period.

Management updated the following expectations for 2015:

  • Mid-single digit comparable restaurant sales growth;
  • Approximately 30 company restaurant openings, including as many as five Bubba’s 33 restaurants;
  • Food cost inflation of 4.0% to 4.5% which implies 1.0% to 2.0% inflation for the second half of the year; and,
  • Total capital expenditures of $145 million to $155 million.

Management reiterated the following expectation for 2015:

  • An income tax rate of approximately 30.0% to 31.0% depending on the reinstatement of certain federal tax credits. (Original Source)

Following the earnings announcement, shares of Texas Roadhouse are down 3.38% to $38.06 in after-hours trading. TXRH has a 1-year high of $40.68 and a 1-year low of $24.51. The stock’s 50-day moving average is $37.73 and its 200-day moving average is $35.94.

On the ratings front, Texas Roadhouse has been the subject of a number of recent research reports. In a report issued on May 5, Jefferies Co. analyst Andy Barish maintained a Hold rating on TXRH, with a price target of $36, which reflects a potential downside of -9.2% from last closing price. Separately, on the same day, Barclays’ Jeffrey Bernstein maintained a Buy rating on the stock and has a price target of $41.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Andy Barish and Jeffrey Bernstein have a total average return of 14.4% and 10.8% respectively. Barish has a success rate of 60.0% and is ranked #430 out of 3724 analysts, while Bernstein has a success rate of 78.6% and is ranked #257.

Texas Roadhouse Inc is a full-service, casual dining restaurant company. It offers steaks, ribs, fish, seafood, chicken, pork chops, pulled pork and vegetable plates, and an assortment of hamburgers, salads and sandwiches.