Optimistic Sales And EPS Predictions For Texas Roadhouse Amid Strong Dine-In Traffic: Analyst

Wedbush analyst Nick Setyan reiterated an Outperform rating on Texas Roadhouse, Inc. TXRH, with a price target of $123.

Notwithstanding near- and medium-term margin headwinds, TXRH is expected to be one of the primary share gainers within the casual dining category for the foreseeable future, notes the analyst.

For the second quarter, which is expected to be reported the next month, the analyst projects stronger dine-in traffic and increased sales due to higher levels of local marketing. 

The analyst raised the second quarter SSS growth estimate to 9.5% from 8.5%. 

While Setyan maintained the Q3 and Q4 SSS growth estimates for now, given the trajectory of transaction trends, the analyst sees upward revisions post second-quarter earnings.

Considering the positive trends, the analyst raised the 2023 EPS estimate to $4.74 from $4.70. Setyan also increased the 2024 EPS estimate to $5.48 from $5.46. 

Menu pricing of 2.2% was taken at the start of the second quarter. The analyst's blended 2023 menu price estimate is 5.2%.

On the negative side, the analyst sees some risk to commodity inflation and hourly labor growth (in addition to wage inflation), which could weigh on current consensus expectations. The company reiterated FY23 commodity and labor inflation guidance of 5%-6%. 

Price Action: TXRH shares are trading higher by 0.87% to $111.31 on the last check Thursday.