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.

Expansion of secondary brands and digital improvements are driving unit growth, efficiency, and enhanced customer experience to support future sales and margin gains.
Strong brand presence in growing suburban markets, combined with cost management strategies, positions the company for sustained revenue and earnings growth above industry trends.
Persistent cost pressures from beef inflation, declining alcohol sales, digital lag, and wage increases could undermine margins, revenue growth, and long-term competitive position.

Catalysts

About Texas Roadhouse

Operates casual dining restaurants in the United States and internationally.What are the underlying business or industry changes driving this perspective?

Expansion of Bubba's 33 and Jaggers brands, with a sizable pipeline of openings planned and a proven infrastructure/leadership team, supports sustained unit growth and future revenue acceleration as new stores mature.
Successful digital integration-enhancements to the mobile app, improved waitlist/to-go experience, and broad rollout of digital kitchen technology-are boosting operational efficiency and guest convenience, which is likely to drive both sales growth and margin improvement.
Steady guest traffic increases, high guest satisfaction scores, and a strong value-for-money perception position the company to capitalize on ongoing growth in consumer discretionary spending and the preference for experiential dining, supporting robust same-store sales and top-line performance.
Continued population growth and suburbanization in markets where Texas Roadhouse has a strong brand presence is increasing the company's addressable market and potential for above-industry-average same-store sales and revenue growth.
Ongoing supply chain optimization, cost control focus, and leveraging scale for better input pricing provide margin expansion opportunities, helping offset commodity and wage inflation and supporting long-term earnings growth.

Texas Roadhouse Earnings and Revenue Growth

Texas Roadhouse Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Texas Roadhouse's revenue will grow by 9.1% annually over the next 3 years.
Analysts assume that profit margins will increase from 7.7% today to 8.1% in 3 years time.
Analysts expect earnings to reach $594.2 million (and earnings per share of $8.94) by about September 2028, up from $438.0 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $529.4 million.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 27.7x on those 2028 earnings, up from 25.5x today. This future PE is greater than the current PE for the US Hospitality industry at 23.9x.
Analysts expect the number of shares outstanding to decline by 0.39% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.59%, as per the Simply Wall St company report.

Texas Roadhouse Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Elevated and persistent beef inflation-exacerbated by tight supply and high retail demand-continues to pressure food and beverage costs (notably 5.2% commodity inflation in Q2 with projections of up to 7% for Q3 and sustained high levels in Q4), which reduces restaurant margins and may constrain net earnings growth if not offset by further price increases or sustained traffic.
Negative mix pressure driven by declining alcohol sales (a multi-year secular trend), partially offset by modest gains in mocktails and entrees, could undermine average check growth and dampen comparable sales, impacting revenue expansion and margin resilience long-term.
Heavy reliance on in-person dining and limited momentum in delivery channel innovation-particularly at core Texas Roadhouse units, with management explicitly resisting broader delivery rollout-risks missing out on the secular consumer shift toward convenience and the "homebody" economy, potentially affecting future market share and top-line revenue growth.
Slow or limited digital adoption in core brands (beyond mobile app usage for To-Go and waitlist) may disadvantage Texas Roadhouse against competitors that more fully integrate technology for guest loyalty and operational efficiency, undermining throughput improvement and margin expansion opportunities.
Exposure to rising wage inflation (guided at 4% for 2025 with labor as a percentage of sales at 32.9% for Q2) and regulatory risk (such as increased minimum wage laws, health care mandates, or state-specific legislation), coupled with ongoing unit development and higher capital expenditure requirements, could compress net margins and constrain free cash flow available for shareholder returns or reinvestment.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $197.609 for Texas Roadhouse based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $227.0, and the most bearish reporting a price target of just $170.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $7.4 billion, earnings will come to $594.2 million, and it would be trading on a PE ratio of 27.7x, assuming you use a discount rate of 8.6%.
Given the current share price of $168.12, the analyst price target of $197.61 is 14.9% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Solid Traffic And Menu Adjustments Will Offset Rising Costs Ahead