TXRH Stock Study (3-4-26)

Posted by Mark on September 2, 2025 at 06:56 | Last modified: March 4, 2026 08:29

I recently did a stock study on Texas Roadhouse Inc. (TXRH, $181.23).

M* writes:

     > Texas Roadhouse Inc is a restaurant company operating predominantly
     > in the casual dining segment. The company manages its restaurant
     > and franchising operations by concept and, as a result, has
     > identified Texas Roadhouse, Bubba’s 33, Jaggers, and retail
     > initiatives as separate operating segments. In addition, it has
     > identified Texas Roadhouse and Bubba’s 33 as reportable segments.
     > Maximum revenue for the company is generated from the Texas
     > Roadhouse segment, which is a moderately priced, full-service,
     > casual dining restaurant concept offering steaks, a selection of
     > ribs, seafood, chicken, pork chops, pulled pork, vegetable plates,
     > and an assortment of hamburgers, salads, and sandwiches.
     > Geographically, the majority of the firm’s restaurants are in
     > the USA, with a few in foreign countries.

Over the past decade, this medium-size company grows sales and EPS at annualized rates of 13.3% and 18.3%, respectively. Lines are mostly up, straight, and parallel except for sales+EPS decline in ’20 (COVID-19 shutdowns) and an EPS dip in ’25. Ten-year EPS R^2 is 0.42 (probably over 0.80 with ’20 excluded) and Value Line (VL) gives an Earnings Predictability score of 40. Shares outstanding decrease 6.5% (0.7%/year).

Over the past decade, PTPM leads peer and industry averages while ranging from 0.8% in ’20 to 9.8% in ’24 with a last-5-year mean of 8.4%. ROE leads peer and industry averages while increasing from 15.7% (’16) to 27.6% (’25) with a last-5-year mean of 27.6%. Debt-to-Capital is less than peer and industry averages despite increasing from 6.5% (leases and rentals not included for ’16) to 40.0% (’25) with a last-5-year mean of 40.6%.

Quick Ratio is 0.38 and Interest Coverage N/A (no long-term debt) per M* who assigns “Wide” [quantitative] Economic Moat and a A grade for Financial Health (BetterInvesting® website). VL rates the company B++ for Financial Strength.

With regard to sales growth:

• YF gives YOY ACE 11.2% and 9.3% for ’26 and ’27 (based on 28 analysts).
• Zacks gives YOY ACE 11.3% and 9.1% for ’26 and ’27, respectively (8 analysts).
• VL projects 9.5% annualized from ’24-’30.
• CFRA projects 11.2% YOY and 10.3% per year for ’26 and ’25-’27, respectively.
• M* offers a 2-year ACE of 10.2%.

I am forecasting below the range at 9.0% per year.

With regard to EPS growth:

• MarketWatch projects 10.3% and 13.5% per year for ’25-’27 and ’25-’28, respectively (based on 33 analysts).
• Nasdaq.com gives ACE 23.1% YOY and 21.9%/year for ’27 and ’26-’28 (11 / 11 / 2 analysts for ’26 / ’27 / ’28).
• Seeking Alpha projects 4-year annualized growth of 15.8%.
• Finviz gives ACE 5-year annualized growth of 14.8% (12).
• LSEG estimates LTG at 15.8%.
• YF gives YOY ACE 3.0% and 22.1% for ’26 and ’27, respectively (29).
• Zacks gives YOY ACE 4.1% and 23.2% for ’26 and ’27 (11) along with 5-year annualized growth of 14.5%.
• VL projects 12.8% annualized from ’24-’30.
• CFRA projects 3.1% YOY and 12.3% per year for ’26 and ’25-’27, respectively.
• M* gives long-term ACE of 12.0% per year.

My 11.0% forecast is below the long-term-estimate range (mean of six: 14.3%). Initial value is ’25 EPS of $6.10/share.

My Forecast High P/E is 25.0. Over the past 10 years (excluding ’20), high P/E ranges from 25.6 in ’22 to 34.2 in ’18 with a last-5-year mean of 29.8 and last-5-year-mean average P/E of 25.0. I am below the 10-year range.

My Forecast Low P/E is 19.0. Over the past 10 years (excluding ’20), low P/E ranges from 17.3 in ’22 to 24.4 in ’25 with a last-5-year mean of 20.1. I am forecasting near bottom of the range [only ’22 and ’24 (17.8) are less].

My Low Stock Price Forecast (LSPF) is $126.00. Default ($115.70) given initial value from above seems unreasonably low at 36.2% less than previous close and 22.2% less than 52-week low. My [arbitrary] selection is 30.5% and 15.3% less, respectively (and results in an effective Forecast Low P/E of 20.7).

Over the past 10 years (excluding ’20), Payout Ratio (PR) ranges from 34.3% in ’21 to 48.8% in ’19 with a last-5-year mean of 42.3%. I am forecasting below the range at 34.0%.

These inputs land TXRH in the HOLD zone with a U/D ratio of 1.6. Total Annualized Return (TAR) is 9.5%.

PAR (using Forecast Average—not High—P/E) of 6.1% is less than I seek for a medium-size company. If a healthy margin of safety (MOS) anchors this study, then I can proceed based on the TAR instead.

To assess MOS, I compare my inputs with Member Sentiment (MS). Based on 102 studies done in the past 90 days (my study and 44 other outliers excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and PR are 10.0%, 11.3%, 29.0, 19.0, and 48.1% respectively. I am lower on all but Forecast Low P/E. VL projects a future average annual P/E of 24.0 that is equal to MS and greater than mine (effectively 22.9).

MS high / low EPS are $11.04 / $6.42 versus my $10.28 / $6.10 (per share). My high EPS is less due to a lower growth rate. VL high EPS of $13.30 soars above both.

MS LSPF of $124.30 implies a Forecast Low P/E of 19.4: greater than the above-stated 19.0. MS LSPF is 1.9% greater than the default $6.42/share * 19.0 = $121.98 that results in more aggressive zoning. MS LSPF is 1.4% less than mine, however.

MOS is robust in the study because my inputs are [near or] less than [bottom of] historical/analyst/MS averages/ranges. Also backing this assessment is MS TAR exceeding mine by 5.2% per year.

Regarding valuation, PEG is 2.0 and 2.4 per Zacks and my projected P/E: slightly overvalued (0.4 per M* seems low enough to be erratum). Relative Value [(current P/E) / 5-year-mean average P/E] is elevated at 1.2. “Quick and Dirty DCF” calculates stock overvalued by 32% (M* currently says 12% premium despite the aforementioned 0.4).

This is Ken Kavula’s Manifest Investing Round Table selection for Feb 2026. My inputs are a bit lower.

Per U/D, TXRH is a BUY under ~$159/share. BetterInvesting® TAR criterion would be met [224.3 / ((13.47 / 100 ) +1 ) ^ 5] ~ $119 given a forecast high price ~$224.

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