Restaurant company Texas Roadhouse (NASDAQ:TXRH) reported results in line with analysts' expectations in Q2 CY2024, with revenue up 14.5% year on year to $1.34 billion. It made a GAAP profit of $1.79 per share, improving from its profit of $1.22 per share in the same quarter last year.
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Texas Roadhouse (TXRH) Q2 CY2024 Highlights:
- Revenue: $1.34 billion vs analyst estimates of $1.34 billion (small beat)
- EPS: $1.79 vs analyst estimates of $1.64 (9.2% beat)
- Gross Margin (GAAP): 18.7%, up from 16.2% in the same quarter last year
- Free Cash Flow of $9,300, down 100% from the previous quarter
- Locations: 762 at quarter end, up from 709 in the same quarter last year
- Market Capitalization: $11.05 billion
Jerry Morgan, Chief Executive Officer of Texas Roadhouse, Inc. commented, “We continued our momentum in the current quarter as strong traffic trends and some relief on commodity inflation led to increased profitability across all of our brands. With our operators delivering solid operating results, and a balanced development pipeline, we are well positioned for the second half of the year.”
With locations often featuring Western-inspired decor, Texas Roadhouse (NASDAQ:TXRH) is an American restaurant chain specializing in Southern-style cuisine and steaks.
Sit-Down Dining
Sit-down restaurants offer a complete dining experience with table service. These establishments span various cuisines and are renowned for their warm hospitality and welcoming ambiance, making them perfect for family gatherings, special occasions, or simply unwinding. Their extensive menus range from appetizers to indulgent desserts and wines and cocktails. This space is extremely fragmented and competition includes everything from publicly-traded companies owning multiple chains to single-location mom-and-pop restaurants.
Sales Growth
Texas Roadhouse is one of the larger restaurant chains in the industry and benefits from a strong brand, giving it customer mindshare and influence over purchasing decisions.
As you can see below, the company's annualized revenue growth rate of 13.9% over the last five years was impressive as it added more dining locations and increased sales at existing, established restaurants.
This quarter, Texas Roadhouse's year-on-year revenue growth clocked in at 14.5%, and its $1.34 billion in revenue was in line with Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 12.7% over the next 12 months, a deceleration from this quarter.
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Same-Store Sales
Same-store sales growth is a key performance indicator used to measure organic growth and demand for restaurants.
Texas Roadhouse's demand has outpaced the broader restaurant sector over the last eight quarters. On average, the company has grown its same-store sales by a robust 9% year on year. With positive same-store sales growth amid an increasing number of restaurants, Texas Roadhouse is reaching more diners and growing sales.
Key Takeaways from Texas Roadhouse's Q2 Results
We were impressed by how significantly Texas Roadhouse blew past analysts' gross margin expectations this quarter. We were also happy its revenue and EPS narrowly outperformed Wall Street's estimates. Overall, we think this was a strong quarter that should satisfy shareholders. The stock traded up 1.8% to $169 immediately following the results.
Texas Roadhouse may have had a good quarter, but does that mean you should invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.