Texas Roadhouse (TXRH) Stock Forecast & Price Target

Texas Roadhouse Inc. has demonstrated robust operational efficiency, with a notable return on margin (ROM) of 17.0%, reflecting an increase of approximately 170 basis points year-over-year, largely driven by sales leverage and reduced operating costs. The company's same-restaurant sales (SRS) grew by 7.7%, supported by a 4.9% increase in traffic and a 2.8% rise in average check, highlighting its ability to outperform competitors despite industry challenges. Additionally, the long-term potential for expanding its Texas Roadhouse units to 900 and the maintenance of margins within the 17-18% range indicate significant growth opportunities that contribute to a positive outlook on the company’s stock performance.

Texas Roadhouse's financial outlook is negatively impacted by declining menu pricing, which is expected to decrease from 3.1% in Q1 to 2.3% in Q2 and Q3, contributing to a projected 70 basis points margin decline this year. The company's same-store sales (SSS) growth estimates have been conservatively reduced, dropping from 5.5% to 3.0% for Q1 and from 5.4% to 4.0% for 2025, indicating a soft start for the restaurant industry. Additionally, labor inflation is anticipated to affect margins, with the company lowering its 2025 unit level margin estimate to 16.7%, down from a previous estimate of 17.3%.