TXRH: Beef Cost Relief And Traffic Resilience Will Support Future Earnings

Analysts have nudged their Texas Roadhouse price target slightly higher, with our fair value estimate rising to $190.48 from $189.16, as they balance resilient traffic trends and solid execution against margin pressure from elevated beef and broader commodity costs.

Analyst Commentary

Recent Street research reflects a mixed but generally constructive view on Texas Roadhouse, with price targets adjusting around evolving expectations for traffic resilience, commodity inflation, and valuation risk.

Bullish Takeaways

• Bullish analysts highlight that same store sales and traffic momentum appear to be holding up well despite a tougher macro backdrop, supporting a premium multiple versus casual dining peers.
• Some target increases argue that, for restaurant stocks trading near the low end of historical valuation ranges, Texas Roadhouse is well positioned for multiple expansion if earnings durability is confirmed.
• Coverage notes that, operationally, the brand continues to execute at a higher level than most chains, with limited evidence of macro pressure on its core customer, reinforcing confidence in long term unit growth.
• Where price targets were raised, the moves reflect confidence that the company can navigate near term headwinds while compounding earnings over time, which some analysts see as justifying upside to current fair value estimates.

Bearish Takeaways

• Bearish analysts cutting targets emphasize significant commodity inflation expected into FY26, particularly elevated beef costs, which could cap near term margin expansion and earnings revisions.
• Several lowered targets frame the Q3 earnings miss and slowing demand trends in parts of the broader restaurant space as reasons to temper growth assumptions and valuation multiples.
• There is rising caution that widening macro pressures beyond low income consumers could eventually weigh on traffic, limiting the room for further menu pricing without risking volume.
• Even with positive brand momentum, some see risk that expectations have run ahead of fundamentals, arguing that the current share price already discounts robust execution, leaving less buffer for additional cost shocks or a deeper demand slowdown.

What's in the News

• President Trump is expected to sign an order reducing tariffs on beef and other grocery staples, which could ease Texas Roadhouse’s beef input costs and support margins over time (Bloomberg).
• Texas Roadhouse appointed industry veteran Mike Lenihan as Chief Financial Officer, effective December 3, 2025, expanding the leadership bench with deep restaurant finance and supply chain experience (company filing).
• The company reiterated its 2025 financial guidance and issued 2026 guidance, calling for positive comparable restaurant sales growth in both years, supported in part by recent menu pricing actions (company guidance).
• Texas Roadhouse completed a share repurchase tranche, buying back 406,523 shares for $70 million under the authorization announced February 20, 2025, signaling continued capital return to shareholders (company disclosure).

Valuation Changes

• Fair Value Estimate has risen slightly, increasing from $189.16 to $190.48 per share, reflecting a modestly more constructive long term outlook.
• Discount Rate has edged higher, moving from 8.47 percent to approximately 8.55 percent, implying a slightly higher required return and marginally more conservative risk assumptions.
• Revenue Growth has dipped fractionally, easing from about 9.38 percent to 9.38 percent, signaling a nearly unchanged but marginally more cautious top line growth trajectory.
• Net Profit Margin has improved slightly, rising from roughly 7.97 percent to 7.97 percent, indicating a modest upgrade to long run profitability expectations.
• Future P/E has ticked up, increasing from 25.79x to about 26.01x, suggesting a minor expansion in the valuation multiple applied to forward earnings.