Measuring Texas Roadhouse Inc’s (NASDAQ:TXRH) track record of past performance is a useful exercise for investors. It enables us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess TXRH’s recent performance announced on 26 December 2017 and weigh these figures against its long-term trend and industry movements. Check out our latest analysis for Texas Roadhouse
Were TXRH’s earnings stronger than its past performances and the industry?
I use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This method allows me to examine various companies on a similar basis, using the latest information. For Texas Roadhouse, its latest trailing-twelve-month earnings is US$131.53M, which compared to last year’s figure, has risen by 13.75%. Since these values may be somewhat short-term thinking, I’ve computed an annualized five-year value for Texas Roadhouse’s net income, which stands at US$89.45M This means that, on average, Texas Roadhouse has been able to increasingly improve its profits over the last couple of years as well.What’s enabled this growth? Well, let’s take a look at if it is merely because of industry tailwinds, or if Texas Roadhouse has experienced some company-specific growth. In the past few years, Texas Roadhouse expanded its bottom line faster than revenue by effectively controlling its costs. This brought about a margin expansion and profitability over time. Viewing growth from a sector-level, the US hospitality industry has been growing its average earnings by double-digit 15.32% in the past twelve months, and 11.30% over the previous five years. This suggests that any uplift the industry is deriving benefit from, Texas Roadhouse has not been able to leverage it as much as its average peer.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While Texas Roadhouse has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research Texas Roadhouse to get a more holistic view of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for TXRH’s future growth? Take a look at our free research report of analyst consensus for TXRH’s outlook.
- 2. Financial Health: Is TXRH’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- 3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.