Texas Roadhouse (TXRH) Stock Forecast & Price Target

Texas Roadhouse Inc. has demonstrated strong financial performance in its most recent quarter, reporting a return on management (ROM) of 17.0%, which reflects a year-over-year improvement of approximately 170 basis points, driven by effective sales leverage and lower operating costs. The company achieved a same-restaurant sales (SRS) growth of 7.7%, supported by a traffic increase of 4.9% and an average check rise of 2.8%, indicating its resilience in the face of broader industry challenges. Additionally, the overall increase in weekly operating hours by 4.6% over the past five years underscores the company's commitment to optimizing operational efficiency and positions it favorably for future growth.

Texas Roadhouse is experiencing a downward trajectory in pricing strategy, with projected menu price increases decreasing from 3.1% in Q1 to 2.3% in the subsequent quarters, contributing to a forecasted decline in margins by 70 basis points from the previous year's level. Furthermore, the company's same-store sales (SSS) growth estimates have been revised down significantly, with a new conservative outlook of 3.0% for Q1, down from 5.5%, and an adjustment for 2025's SSS growth to 4.0% from 5.4%. Compounding these challenges, labor inflation remains a concern, with guidance set at 4-5%, which, along with reduced margin expectations of 16.7% for 2025, raises substantial concerns about the company's ability to sustain profitability amid industry pressures.