Texas Roadhouse (NASDAQ: $TXRH) is a popular American steakhouse chain renowned for its Texas and Southwestern cuisine-style steaks and casual dining atmosphere. It has franchises worldwide, including in Saudi Arabia, Kuwait, Bahrain, Qatar, the Philippines, China, and South Korea.
On February 15, 2024, the company reported its Q4 and full-year results for the year ending December 26, 2023.
Q4 and Annual Results In-Line With Estimates
For the fourth quarter, the revenue soared by 15.3% Y/Y, amounting to $1.16 billion and in line with analyst expectations of $1.16 billion. The restaurant reported an earning per share of $1.08, beating estimates of $1.07. Texas Roadhouse reported a GAAP profit of $1.08 per share, an improvement from the $0.89 per share the previous year.
Moreover, the restaurant chain reported a 75 basis point improvement in restaurant margin to 15.3%, fueled by higher sales, partially offset by labor inflation of 5.5%, 3.2% commodity inflation, and increased general liability insurance costs.
There were 12 company restaurants and seven franchise restaurants inaugurated in this quarter. In addition, Texas Roadhouse bought back 40,707 shares of common stock worth $4.8 million.
Full-year revenue increased by 15.4% for the year 2023 to $4.6 billion, while net income grew by 13.0% to $305 million. However, the restaurant margin declined by 36 basis points to 15.4%.
The FY23 diluted earnings per share increased by 14.3% to $4.54, propelled by the higher restaurant margin dollars, which increased by 12.8% to $708.0 million from $627.5 million the previous year.
The company bought back 455,026 shares of its common stock worth $50 million for the year 2023.
CEO Comments
The CEO of Texas Roadhouse, Inc., Jerry Morgan, said, “We had another outstanding year in 2023, which was highlighted by double-digit same-store sales growth and a record number of new system-wide openings across all three brands. We are extremely thankful to our operators for their exceptional leadership and all Roadies who make dining at our restaurants such a legendary experience.”
He added, “As we move into 2024, our development pipeline is progressing as we anticipated with 19 new company restaurants under construction. We expect a more evenly distributed opening schedule will create efficiencies and positively impact store week growth. Our strong balance sheet and disciplined capital allocation strategy continues to provide us the necessary flexibility to fund new store growth and return capital to our shareholders.”
2024 Outlook
Texas Roadhouse reported that comparable restaurant sales grew by 6.8% in the first 50 days of 2024 compared to the prior year. The company stated that it plans to raise menu prices by 2.2% in late March.
Management forecasted an increase in comparable sales growth for 2024. It also expects 8% store week growth, including a 2% benefit from the 53rd week. For the full year, it forecasts wage and labor inflation of 4%-5%, commodity inflation of around 5%, and total expenditure of $340-$350 million.
Furthermore, the company’s board of directors approved the payment of a quarterly cash dividend of $0.61 per share. The payout is an 11% increase from the quarterly cash dividend approved in 2023; it will be distributed on March 26, 2024, to shareholders of record as of March 13, 2024.
Stock Update: $TXRH
As of Friday, February 16, 2024, TXRH is trading at $147.34, a 9.88% increase from its previous close of $133.89. Year-to-date, the stock is up 23.22% and up 39.79% over the past 12 months. During early morning trading on Friday, the stock hit a new 52-week high of $152.55.
Its price is above its 50-day and 200-day moving averages of $122.14 and $110.23, respectively. At the time of writing, the market cap is 9.775B, with a volume of 1,092,576.
Should you Buy $TXRH?
Texas Roadhouse delivered robust fourth-quarter results, reporting a 6% increase in net sales. It has also made significant progress in the expansion of its restaurant chain. While the company continues to face inflationary challenges, it is offsetting that with a 2.2% increase in menu prices.
Overall, the company had a good performance in Q4, and its balance sheet is strong enough to overcome any headwinds. Based on this assessment, adding TXRH stock to your portfolio would be a great long-term strategy.
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