TXRH Stock Overview
Texas Roadhouse, Inc., together with its subsidiaries, operates casual dining restaurants in the United States and internationally.
Texas Roadhouse Competitors
Price History & Performance
|Historical stock prices|
|Current Share Price||US$87.26|
|52 Week High||US$96.41|
|52 Week Low||US$68.58|
|1 Month Change||-0.24%|
|3 Month Change||15.90%|
|1 Year Change||-8.32%|
|3 Year Change||76.85%|
|5 Year Change||74.14%|
|Change since IPO||677.03%|
Recent News & Updates
Texas Roadhouse: When The Financials Are As Good As The Steaks
Summary TXRH has a medium market cap and has been killing the competitors over the last 10 years. The company has one of the best financial statements I've ever looked at, with hidden owner earnings that you may not expect. They are a company that keeps spawning new brands. They might be one of the next compounders in the food industry. The company is also managed by one of the finest boards I've ever seen. Management is really a good capital allocator. Investment Thesis Texas Roadhouse (TXRH) is the largest steakhouse chain in the U.S. Despite the big size they already have in the US, they plan to open more restaurants, implement new brands and expand abroad where they might thrive even more. Management's capacity to allocate capital is very impressive. They are able to reach breakeven for any restaurant they open within 2 year. However what I really like of the company and what got me interested, it is its financial. For being a company that operates in the restaurant industry, TXRH looks in great financial health and its cash flows are astonishing. Even though the current headwinds might slow down the growth and reduce the marginality, the long term outlook appears positive. If the price had to drop and reach the target price I came up with, I would be more than willing to start building a position and keep the stock for the long term. Business Model The company is a growing restaurant company operating predominately in the casual dining segment. Their mission statement is "Legendary Food, Legendary Service." The company's operating strategy is designed to position each of the restaurants as the local hometown favorite for a broad segment of consumers seeking high quality, affordable meals served with friendly, attentive service. As of June 30, 2022, they own and operate 582 restaurants and have franchised an additional 62 domestic restaurants and 34 international restaurants. Of the 582 restaurants they own and operate, they operate 541 as Texas Roadhouse restaurants, 37 as Bubba’s 33 restaurants and four as Jaggers restaurants. Image created by author using data from TXRH's latest Q10 2. The second part of their business model structure are the restaurant franchise arrangements. As of June 30, 2022, they have 25 franchisees that operate 96 Texas Roadhouse restaurants in 23 states and ten foreign countries. financials/2022/q2/TXRH-Q2-2022-earnings-release.pdf Approximately 75% of the franchise restaurants are operated by ten franchisees and no franchisee operates more than 16 restaurants. Financials Income Statement When it comes to the financial statement the first voice that shows up is the revenue. The turnover has been going nothing but up, growing at a 12% CAGR over the last 10 years moving from $1.263 to $3.464 billion. The positive trend seems to continue even though the growth is likely to slow down in the future. financials/2022/q2/TXRH-Q2-2022-earnings-release.pdf Gross profits in the FY2021 were $627 million, growing almost as much as the revenue. The gross margins were 18%, slightly down compared to the previous years. It looks like the bigger they become the more costs they have to cope with. In fact 5 years ago the margins were almost 20%. I don't see this as much of a problem because they are still trying to grow, keeping competitive prices and entering in new markets. I feel that over the years this metric will eventually stabilise. Plus, they have been killing the competitors, gaining increasingly more market share, as we will see later on in the analysis. At the bottom line we find the Net Income. Texas reported for the FY2021 a net profit of $245 million, growing almost 250% in the last 10 years, compounding at 14,5% per year. As I will explain later on the valuations, the money that TXRH is able to print is much more appealing than what shows up on the obsolete and common net income. Balance Sheet Texas Roadhouse looks to be in great financial health, better that any restaurant company I have ever looked at. Let's start with the cash line. As of June 28, 2022, they have $180,411 million in cash and equivalents with a total current asset of $281 million. The total current liabilities amount to $529 million, which means they need to find roughly $250 million within a year. That brings their quick ratio to 0,53. Usually, a rate below 1 might show that the company doesn't have enough quick cash to meet all its short-term obligations, but that is not the case. Let's remember that Texas is a money printing machine, so they will be able to pay their debts without divesting from other assets or issuing new debt. Plus they found themselves in this situation only for reasons I will explain in a few moments in the cash flow statement, otherwise the rate would be around 1. Regarding the Total liabilities, during the last year they have been paying down their long term debt, passing from $190 million to $75 million, which compared to the amount of cash that they generate in free cash flow every year, the debt is practically nothing. Furthermore, the debt is not due for the next three years, so no concerns on that. The current total Equity is sitting around $1 billion, a number that over the last years has been steadily growing. A company that is able to increase their equity over time like that, shows good financial health. Image created by author using data from TXRH's latest Q10 Cash Flow Statement Here we can discover why Texas is really appealing. In FY21 they made $470 million in operating cash flow and spent $200 million in Capex, generating a free cash flow of roughly $270 million. When it comes to analysing how much a company generates exactly in FCF/owner earnings, we should distinguish the different expenses they cope with during the year in the capital expenditure section, but I'll explain it better in the valuation paragraph. Now, let's take a look at what they did during Q2. With regards to cash flow, they ended the second quarter with $180 million in cash, which is down $145 million from the end of the first quarter. Cash flow from operations of $111 million was more than offset by $60 million in capital expenditures, $31 million in dividend payments, $25 million in debt repayment and $128 million in share repurchases. With the addition of the 1.7 million shares that the company repurchased in the second quarter, they have now repurchased over 2.7 million shares of stock for $212.9 million this year. At the end of the second quarter, they have approximately $167 million remaining under their share repurchase program. They also acquired one franchise restaurant for $6.6 million, amounting in total for the first 6 fiscal months to $33 million. They continue to expect full year 2022 capital expenditures to be approximately $230 million. The statement below shows the cash flow activities (expenses) of the first H1. financials/2022/q2/TXRH-Q2-2022-earnings-release.pdf My view is that they will not buy back anymore shares for at least a year. The reason for this is because, if we assume that within a year they are able to generate the same amount of operating cash flow they did in the FY21, keeping the capital expenditures as they expect and paying dividends, they won't have enough money to buyback shares. They would have to either issue new debt or lower their expenses, if they intended to do it. It's more likely they will stop, at least for the moment, their repurchase program and keep paying down the debt rather than issuing a new one. All the data listed under financials can be found in the latest Q-10. Future outlook and growth For 2022, the Company plans to open approximately 21 Texas Roadhouse company locations and the franchise partners plan to open as many as five restaurants. In the first six months of 2022 the company has already opened eight company restaurants and three international franchises. Moreover, since Bubba’s 33 has had a great success so far, for 2022 they plan to open as many as four additional restaurants. At the moment only one restaurant has been opened. In the first half of 2022, the Company completed the acquisition of eight franchise restaurants for an aggregate purchase price of $33.1 million. They are currently not accepting new domestic Texas Roadhouse franchises. My take on that is that maybe over the years they might want to get rid of the franchise structure, at least in the US, in order to better their profits or maybe just buying out the most profitable ones, since they have been doing so for the last five years. Economics of developing Latest TXRH's annual report They expect the developing costs to be in 2022 around $6.5 million for the Texas Roadhouse restaurants and $7.3 million for the Bubba's 33. As they stated in the first fiscal 10-Q . Furthermore, they have entered into area development and franchise agreements for the development and operation of Texas Roadhouse restaurants in several foreign countries and one U.S. territory. On June 28, 2022 the total number of international restaurants were 34. Competitors Competition in the restaurant industry is very intense. Since we cannot take into analysis every restaurant chain, I believe that a better comparison would be just on focusing on steakhouse competitors that are publicly traded, have almost the same size and are as financially healthy as TXRH. The only company that has these kind of requirements is LongHorn Steakhouse owned by Darden Restaurants (NYSE:DRI). We could take into analysis also Outback Steakhouse owned by Bloomin' Brands Inc. (NASDAQ:BLMN), but the company is highly leveraged and a slightly overpriced, at least from my point of view. Furthermore LongHorn's quality of food appears to be better than Outback's. LongHorn total net sales for the FY22 were approximately $2.3 billion, 31% higher than the previous year. A stunning result, but we have to keep in mind that more than a half of their fiscal year was impacted by covid restrictions, so it makes sense they did not make much money back then. Darden Restaurants annual report 2022 Now, if we make a comparison with Texas Roadhouse, it's clear that the winner is only one. TXRH in same period of time grew its revenue by almost 50% compared to same previous period (LongHorn's FY21). The result is even more astonishing if we think that the two companies own almost the same number of restaurants. Just for instance, if we divided the total revenue (excluding franchise royalties and fees) with the number of restaurants owned and leased, TXRH makes about $6.5 million per restaurant, LongHorn only $4.4 million. Regarding instead the analysis of the financial statements, Darden Restaurants International (the company that owns LongHorn) appears to be slightly more leveraged compared to Texas Roadhouse. As of May 29,2022 their total cash on hands, equivalent and restricted cash amounted to around $430 million, instead their current liabilities were $1.85 billion, so within a year they must be able to find the $1.4 billion difference. It is true that they have also roughly $275 million in inventory, but it is always a tricky current asset. The long-term debt instead, consisted principally of: $500.0 million of unsecured 3.850 percent senior notes due in May 2027. $96.3 million of unsecured 6.000 percent senior notes due in August 2035. $42.8 million of unsecured 6.800 percent senior notes due in October 2037. $300.0 million of unsecured 4.550 percent senior notes due in February 2048. The latest Fitch's rating on Darden restaurants' debt is "BBB". On the cash flow side, in the FY22 they were able to generate $1.25 billion on operating, and spent on capital expenditures roughly $380 million. If they generate the same amount of cash flow for the next year and also reduce the capex and suspend dividends and the repurchase of shares, they might be able to pay all their current liabilities due, without resorting to issuing new debt. Otherwise they either divest a few assets, even though they do not own anything that can be turned into liquidity rapidly, or more likely, they will issue new debt. All the data reported cab be found in the latest annual report of Darden Restaurants. One last thought on Darden Restaurants. The company's financials seems to be well managed. If I instead had to assess instead management's honesty to customers, I would not give a good score. The problem is with their Olive Garden chain. They want you to think you are having a good Italian meal, but in reality the food is everything but Italian. Conference Call During the conference call a few matters arose, which are worth noticing. Regarding new openings and updates, at the begging of the call, the management stated that they expect to open 2 company-owned Jaggers and their first Jaggers franchise restaurant later this year.
A Look At The Intrinsic Value Of Texas Roadhouse, Inc. (NASDAQ:TXRH)
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|TXRH||US Hospitality||US Market|
Return vs Industry: TXRH exceeded the US Hospitality industry which returned -34.1% over the past year.
Return vs Market: TXRH exceeded the US Market which returned -23.2% over the past year.
|TXRH Average Weekly Movement||4.3%|
|Hospitality Industry Average Movement||7.3%|
|Market Average Movement||6.8%|
|10% most volatile stocks in US Market||15.5%|
|10% least volatile stocks in US Market||2.8%|
Stable Share Price: TXRH is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 4% a week.
Volatility Over Time: TXRH's weekly volatility (4%) has been stable over the past year.
About the Company
Texas Roadhouse, Inc., together with its subsidiaries, operates casual dining restaurants in the United States and internationally. The company operates and franchises restaurants under the Texas Roadhouse, Bubba's 33, and Jaggers names. As of December 28, 2021, it operated 566 domestic restaurants and 101 franchise restaurants.
Texas Roadhouse Fundamentals Summary
|TXRH fundamental statistics|
Is TXRH overvalued?See Fair Value and valuation analysis
Earnings & Revenue
|TXRH income statement (TTM)|
|Cost of Revenue||US$3.13b|
Last Reported Earnings
Jun 28, 2022
Next Earnings Date
|Earnings per share (EPS)||3.79|
|Net Profit Margin||6.71%|
How did TXRH perform over the long term?See historical performance and comparison
2.1%Current Dividend Yield
Is TXRH undervalued compared to its fair value, analyst forecasts and its price relative to the market?
Valuation Score 3/6
Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Key Valuation Metric
Which metric is best to use when looking at relative valuation for TXRH?
Other financial metrics that can be useful for relative valuation.
|What is TXRH's n/a Ratio?|
Price to Earnings Ratio vs Peers
How does TXRH's PE Ratio compare to its peers?
|TXRH PE Ratio vs Peers|
|Company||PE||Estimated Growth||Market Cap|
DPZ Domino's Pizza
TXRH Texas Roadhouse
Price-To-Earnings vs Peers: TXRH is good value based on its Price-To-Earnings Ratio (23x) compared to the peer average (47.9x).
Price to Earnings Ratio vs Industry
How does TXRH's PE Ratio compare vs other companies in the US Hospitality Industry?
Price-To-Earnings vs Industry: TXRH is expensive based on its Price-To-Earnings Ratio (23x) compared to the US Hospitality industry average (16.9x)
Price to Earnings Ratio vs Fair Ratio
What is TXRH's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.
|Current PE Ratio||23x|
|Fair PE Ratio||27.7x|
Price-To-Earnings vs Fair Ratio: TXRH is good value based on its Price-To-Earnings Ratio (23x) compared to the estimated Fair Price-To-Earnings Ratio (27.7x).
Share Price vs Fair Value
What is the Fair Price of TXRH when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.
Below Fair Value: TXRH ($88.39) is trading below our estimate of fair value ($98.18)
Significantly Below Fair Value: TXRH is trading below fair value, but not by a significant amount.
Analyst Price Targets
What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?
Analyst Forecast: Target price is less than 20% higher than the current share price.
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How is Texas Roadhouse forecast to perform in the next 1 to 3 years based on estimates from 23 analysts?
Future Growth Score2/6
Future Growth Score 2/6
Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Forecasted annual earnings growth
Earnings and Revenue Growth Forecasts
Analyst Future Growth Forecasts
Earnings vs Savings Rate: TXRH's forecast earnings growth (14.1% per year) is above the savings rate (1.9%).
Earnings vs Market: TXRH's earnings (14.1% per year) are forecast to grow slower than the US market (14.8% per year).
High Growth Earnings: TXRH's earnings are forecast to grow, but not significantly.
Revenue vs Market: TXRH's revenue (7.6% per year) is forecast to grow slower than the US market (7.7% per year).
High Growth Revenue: TXRH's revenue (7.6% per year) is forecast to grow slower than 20% per year.
Earnings per Share Growth Forecasts
Future Return on Equity
Future ROE: TXRH's Return on Equity is forecast to be high in 3 years time (28.8%)
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How has Texas Roadhouse performed over the past 5 years?
Past Performance Score5/6
Past Performance Score 5/6
Growing Profit Margin
Earnings vs Industry
Historical annual earnings growth
Earnings and Revenue History
Quality Earnings: TXRH has high quality earnings.
Growing Profit Margin: TXRH's current net profit margins (6.7%) are higher than last year (6.3%).
Past Earnings Growth Analysis
Earnings Trend: TXRH's earnings have grown by 9.1% per year over the past 5 years.
Accelerating Growth: TXRH's earnings growth over the past year (35.3%) exceeds its 5-year average (9.1% per year).
Earnings vs Industry: TXRH earnings growth over the past year (35.3%) underperformed the Hospitality industry 36.2%.
Return on Equity
High ROE: TXRH's Return on Equity (27.3%) is considered high.
Discover strong past performing companies
How is Texas Roadhouse's financial position?
Financial Health Score3/6
Financial Health Score 3/6
Short Term Liabilities
Long Term Liabilities
Financial Position Analysis
Short Term Liabilities: TXRH's short term assets ($280.9M) do not cover its short term liabilities ($528.5M).
Long Term Liabilities: TXRH's short term assets ($280.9M) do not cover its long term liabilities ($839.2M).
Debt to Equity History and Analysis
Debt Level: TXRH has more cash than its total debt.
Reducing Debt: TXRH's debt to equity ratio has increased from 6.5% to 7.9% over the past 5 years.
Debt Coverage: TXRH's debt is well covered by operating cash flow (627.6%).
Interest Coverage: TXRH's interest payments on its debt are well covered by EBIT (149.8x coverage).
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What is Texas Roadhouse current dividend yield, its reliability and sustainability?
Dividend Score 4/6
Cash Flow Coverage
Current Dividend Yield
Dividend Yield vs Market
|Texas Roadhouse Dividend Yield vs Market|
|Company (Texas Roadhouse)||2.1%|
|Market Bottom 25% (US)||1.7%|
|Market Top 25% (US)||4.7%|
|Industry Average (Hospitality)||2.0%|
|Analyst forecast in 3 Years (Texas Roadhouse)||2.4%|
Notable Dividend: TXRH's dividend (2.11%) is higher than the bottom 25% of dividend payers in the US market (1.67%).
High Dividend: TXRH's dividend (2.11%) is low compared to the top 25% of dividend payers in the US market (4.73%).
Stability and Growth of Payments
Stable Dividend: TXRH's dividend payments have been volatile in the past 10 years.
Growing Dividend: TXRH's dividend payments have increased over the past 10 years.
Earnings Payout to Shareholders
Earnings Coverage: With its reasonably low payout ratio (46.9%), TXRH's dividend payments are well covered by earnings.
Cash Payout to Shareholders
Cash Flow Coverage: With its reasonably low cash payout ratio (49.9%), TXRH's dividend payments are well covered by cash flows.
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How experienced are the management team and are they aligned to shareholders interests?
Average management tenure
Jerry Morgan (61 yo)
Mr. Gerald L. Morgan, also known as Jerry, serves as the President at Texas Roadhouse, Inc. since December 2020 and also serves as its Chief Executive Officer since March 19, 2021 and serves as its Directo...
CEO Compensation Analysis
|Jerry Morgan's Compensation vs Texas Roadhouse Earnings|
|Date||Total Comp.||Salary||Company Earnings|
|Jun 28 2022||n/a||n/a|
|Mar 29 2022||n/a||n/a|
|Dec 28 2021||US$4m||US$411k|
|Sep 28 2021||n/a||n/a|
|Jun 29 2021||n/a||n/a|
|Mar 30 2021||n/a||n/a|
|Dec 29 2020||US$4m||US$100k|
Compensation vs Market: Jerry's total compensation ($USD3.77M) is below average for companies of similar size in the US market ($USD8.66M).
Compensation vs Earnings: Insufficient data to compare Jerry's compensation with company performance.
Experienced Management: TXRH's management team is considered experienced (2.5 years average tenure).
Experienced Board: TXRH's board of directors are considered experienced (4.2 years average tenure).
Who are the major shareholders and have insiders been buying or selling?
Insider Trading Volume
Insider Buying: TXRH insiders have only sold shares in the past 3 months.
Recent Insider Transactions
|18 Aug 22||SellUS$128,047||Christopher Colson||Individual||1,357||US$94.36|
|15 Aug 22||SellUS$322,014||Tonya Robinson||Individual||3,400||US$94.71|
|08 Aug 22||SellUS$222,500||S. Jacobsen||Individual||2,500||US$89.00|
|02 Aug 22||SellUS$173,180||Gregory Moore||Individual||2,000||US$86.59|
|03 Jun 22||SellUS$237,000||Hernan Mujica||Individual||3,000||US$80.02|
|23 May 22||BuyUS$238,803||Curtis Warfield||Individual||3,362||US$71.03|
|20 May 22||BuyUS$498,789||James Zarley||Individual||7,069||US$70.56|
|22 Mar 22||SellUS$85,000||Gregory Moore||Individual||1,000||US$85.00|
|07 Mar 22||BuyUS$223,906||Curtis Warfield||Individual||3,125||US$71.65|
|01 Mar 22||SellUS$229,908||Tonya Robinson||Individual||2,499||US$92.00|
|25 Feb 22||SellUS$290,912||Christopher Colson||Individual||3,241||US$89.76|
|24 Feb 22||SellUS$554,053||Gregory Moore||Individual||6,300||US$90.00|
|08 Nov 21||SellUS$550,950||Gregory Moore||Individual||6,000||US$94.02|
|Owner Type||Number of Shares||Ownership Percentage|
Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.
|Ownership||Name||Shares||Current Value||Change %||Portfolio %|
Texas Roadhouse, Inc.'s employee growth, exchange listings and data sources
- Name: Texas Roadhouse, Inc.
- Ticker: TXRH
- Exchange: NasdaqGS
- Founded: 1993
- Industry: Restaurants
- Sector: Consumer Services
- Implied Market Cap: US$5.834b
- Shares outstanding: 66.85m
- Website: https://www.texasroadhouse.com
Number of Employees
- Texas Roadhouse, Inc.
- 6040 Dutchmans Lane
- United States
|Ticker||Exchange||Primary Security||Security Type||Country||Currency||Listed on|
|TXRH||NasdaqGS (Nasdaq Global Select)||Yes||Common Stock||US||USD||Oct 2004|
|ROW||DB (Deutsche Boerse AG)||Yes||Common Stock||DE||EUR||Oct 2004|
Company Analysis and Financial Data Status
|Data||Last Updated (UTC time)|
|Company Analysis||2022/10/02 00:00|
|End of Day Share Price||2022/09/30 00:00|
Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.