Company Update (NASDAQ:TXRH): Texas Roadhouse Inc Announces Third Quarter 2015 Results


Texas Roadhouse Inc (NASDAQ:TXRH) announced financial results for the 13 and 39 week periods ended September 29, 2015.

Results for the third quarter included the following highlights:

  • Comparable restaurant sales increased 6.9% at company restaurants and 7.7% at franchise restaurants;
  • Restaurant margin, as a percentage of restaurant sales, decreased 22 basis points to 16.6%, primarily driven by higher labor costs. Wage rate inflation, along with higher healthcare costs, more than offset the impact of higher average unit volume;
  • Diluted earnings per share increased 8.0% to $0.29 from $0.27 in the prior year;
  • 10 company-owned restaurants were opened, including one Bubba’s 33 restaurant; and,
  • The Company repurchased 44,000 shares of its common stock for $1.6 million.

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

  • Comparable restaurant sales increased 8.1% at company restaurants and 7.4% at franchise restaurants;
  • Restaurant margin, as a percentage of restaurant sales, decreased 78 basis points to 17.3%. Food cost inflation of approximately 6.0% driven by beef, more than offset the impact of higher average unit volume;
  • Diluted earnings per share increased 8.0% to $1.05 from $0.97 in the prior year;
  • 22 company-owned restaurants were opened, including four Bubba’s 33 restaurants; and,
  • The Company repurchased 132,089 shares of its common stock for $4.7 million.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, “We are pleased with our third quarter results, which included double digit revenue growth comprised of solid comparable restaurant sales growth of 6.9% and store week growth of 7.7% from new restaurant development. Our performance continues to be driven by our commitment to legendary food and legendary service.”

Taylor continued, “Our new restaurant pipeline is strong and we remain on track with our development plans for 2015 and 2016. The consistency of our business and our healthy cash flow generation allows us to fund our new restaurant growth through internal cash flow, while also returning excess capital to our shareholders through dividends and share repurchases, driving further shareholder value.”

2015 Outlook

The Company reported that comparable restaurant sales at company restaurants for the first four weeks of its fourth quarter of fiscal 2015 increased approximately 5.0% compared to the prior year period.

Management updated the following expectations for 2015:

  • Approximately 30 company restaurant openings, including four Bubba’s 33 restaurants (from as many as five Bubba’s 33 restaurants previously);
  • Food cost inflation of approximately 5.0% (from 4.0% to 4.5% previously);
  • An income tax rate of approximately 30.0% to 30.5%, depending on the reinstatement of certain federal tax credits (from 30.0% to 31.0% previously); and,
  • Total capital expenditures of approximately $160.0 million (from $145.0 million to $155.0 million previously).

Management reiterated the following expectation for 2015:

  • Mid-single digit comparable restaurant sales growth.

2016 Outlook

Management provided the following expectations for 2016:

  • Positive comparable restaurant sales growth;
  • 25 to 30 company restaurant openings, including at least five Bubba’s 33 restaurants;
  • Low-single digit food cost deflation;
  • An income tax rate of 30.0% to 31.0%, depending on the reinstatement of certain federal tax credits; and,
  • Total capital expenditures of $155.0 million to $165.0 million. (Original Source)

Shares of Texas Roadhouse are up 4.26% to $36.50. TXRH has a 1-year high of $40.82 and a 1-year low of $28.50. The stock’s 50-day moving average is $37.06 and its 200-day moving average is $36.65.

On the ratings front, Texas Roadhouse has been the subject of a number of recent research reports. In a report issued on October 19, KeyBanc analyst Christopher O`Cull upgraded TXRH to Buy, with a price target of $45, which implies an upside of 30.5% from current levels. Separately, on August 4, Oppenheimer’s Brian Bittner reiterated a Hold rating on the stock .

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Christopher O`Cull and Brian Bittner have a total average return of 8.6% and 12.8% respectively. O`Cull has a success rate of 65.0% and is ranked #779 out of 3808 analysts, while Bittner has a success rate of 62.2% and is ranked #129.

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.