How Do Analysts See Texas Roadhouse, Inc. (NASDAQ:TXRH) Performing In The Next Couple Of Years?

In December 2018, Texas Roadhouse, Inc. (NASDAQ:TXRH) announced its latest earnings update, which confirmed that the business benefited from a robust tailwind, eventuating to a double-digit earnings growth of 20%. Below, I’ve laid out key numbers on how market analysts view Texas Roadhouse’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

Check out our latest analysis for Texas Roadhouse

Analysts’ expectations for the coming year seems positive, with earnings expanding by a robust 14%. This growth seems to continue into the following year with rates arriving at double digit 24% compared to today’s earnings, and finally hitting US$222m by 2022.

NasdaqGS:TXRH Past and Future Earnings, April 1st 2019
NasdaqGS:TXRH Past and Future Earnings, April 1st 2019

Although it’s useful to be aware of the growth rate year by year relative to today’s value, it may be more insightful to determine the rate at which the company is rising or falling on average every year. The advantage of this approach is that we can get a bigger picture of the direction of Texas Roadhouse’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I put a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 10%. This means, we can presume Texas Roadhouse will grow its earnings by 10% every year for the next couple of years.

Next Steps:

For Texas Roadhouse, there are three key aspects you should further research:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is TXRH worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether TXRH is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of TXRH? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.