Texas Roadhouse (TXRH) Stock Forecast & Price Target

Texas Roadhouse Inc. has demonstrated notable financial strength as evidenced by its robust 4Q same-restaurant sales growth of 7.7%, supported by a 4.9% increase in traffic and a 2.8% rise in average check. The company's reported Restaurant Operating Margin (ROM) of 17.0% reflects an improvement of approximately 170 basis points year-over-year, primarily driven by effective sales leverage and reduced operating costs as a percentage of sales. Furthermore, the long-term potential for expansion with a target of 900 additional Texas Roadhouse units, alongside manageable commodity inflation of just 0.3% in 4Q, bolsters a positive outlook for the company’s financial trajectory.

Texas Roadhouse Inc. is facing significant challenges that are reflected in its financial strategies and projections. Menu pricing is expected to decline from 3.1% in Q1 to 2.3% in Q2 and Q3, contributing to a projected 70 basis points margin decrease for the year, while same-store sales (SSS) growth estimates have been downgraded for both Q1 and 2025, indicating weakened demand. Furthermore, labor inflation is set at 4-5%, which, combined with lower pricing projections and soft market conditions, is anticipated to result in a decline in operating margins, underscoring a negative outlook for the company's financial performance.