On 25 December 2018, Texas Roadhouse, Inc. (NASDAQ:TXRH) announced its earnings update. Overall, it seems that analyst forecasts are fairly conservative, with earnings growth rate expected to be 14% next year, which is within range of the past five-year average earnings growth of 15%. With trailing-twelve-month net income at current levels of US$158m, we should see this rise to US$180m in 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
Can we expect Texas Roadhouse to keep growing?
Over the next three years, it seems the consensus view of the 19 analysts covering TXRH is skewed towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of TXRH’s earnings growth over these next few years.
From the current net income level of US$158m and the final forecast of US$223m by 2022, the annual rate of growth for TXRH’s earnings is 10%. EPS reaches $3.1 in the final year of forecast compared to the current $2.21 EPS today. In 2022, TXRH’s profit margin will have expanded from 6.4% to 6.9%.
Future outlook is only one aspect when you’re building an investment case for a stock. For Texas Roadhouse, there are three pertinent factors you should further research:
- 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.
- Valuation: What is Texas Roadhouse 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 Texas Roadhouse is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Texas Roadhouse? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.