A Look at Texas Roadhouse’s (TXRH) Valuation Following Strong Sales Growth and Margin Pressures

Texas Roadhouse (TXRH) just wrapped up its third quarter with impressive revenue growth, largely fueled by higher same-store sales and restaurant openings. Margins have faced pressure from beef inflation, which nudged earnings below Wall Street’s projections.

See our latest analysis for Texas Roadhouse.

Texas Roadhouse’s steady pace of expansion and another healthy dividend haven’t gone unnoticed, but growing costs have weighed on sentiment. Despite upbeat news such as positive guidance for 2026 and new locations on the way, the 1-year total shareholder return sits at -15.3%. This underscores how earnings headwinds have dampened momentum, even as its 3- and 5-year total returns remain exceptional.

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With Texas Roadhouse’s stock trading below analyst price targets despite healthy growth and ambitious expansion, the key question emerges: Is this recent dip a compelling entry for long-term investors, or is the market already factoring in those future gains?

Most Popular Narrative: 15.9% Undervalued

With the most-followed narrative placing Texas Roadhouse’s fair value at $196.16, the stock’s last close of $165.03 catches the attention of those seeking mispriced growth stories. Narrative supporters point to a financial trajectory that is anchored by strong sales execution and strategic investment in expansion.

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.

Read the complete narrative.

Curious what powerful mix of earnings drivers and financial assumptions propels this rosy outlook? The underlying projections are anything but ordinary, hinting at robust operational momentum and future financial benchmarks that could reset investor expectations. See what is really pushing that fair value skyward.

Result: Fair Value of $196.16 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, stubborn beef inflation and potential slowdowns in consumer traffic could still threaten margins and dampen the otherwise robust outlook for Texas Roadhouse.

Find out about the key risks to this Texas Roadhouse narrative.

Build Your Own Texas Roadhouse Narrative

If you’re inspired to dig deeper or want to interpret the numbers for yourself, you can easily craft your perspective in just a few minutes. Do it your way

A great starting point for your Texas Roadhouse research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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