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Bear Of The Day: Texas Roadhouse (TXRH)

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Shareholders of Texas Roadhouse (TXRH - Free Report) might have had some indigestion following the most recent earnings report.  TXRH missed the Zacks Consensus Estimate in each of the last two quarters. Despite the near term bad news, there is still growth on top and bottom to look forward to.

Description

Texas Roadhouse is a growing, moderately priced, full service restaurant chain. They offer an assortment of specially seasoned and aged steaks hand-cut daily in every restaurant and cooked to order over open gas-fired grills. They also offer their customers, whom they call their guests, a selection of ribs, fish, chicken and vegetable plates, an assortment of hamburgers, salads and sandwiches.

Recent Quarter

The most recent quarter was a big miss.  The company reported EPS of $0.29 when $0.37 was expected.  That miss of $0.08 translates into a negative earnings surprise of 21%.

The previous quarter was also a miss, but a much smaller one.  The company missed the Zacks Consensus Estimate by a penny or about 2.7%.

Estimates

Following the miss, the Zacks Consensus Estimate has dropped.  60 days ago the number took at $1.97 for 2017, but has slipped by a dime.  The 2018 number moved from $2.24 to $2.11 over the same time period.

Growth

Earnings may not be growing but the top line still shows some growth.  That has allowed the stock to maintain 23x forward earnings multiple.   The price to book multiple of 4.5x is a little high while the 1.6x price to sales multiple is pretty low.  The sector TXRH competes in has recently seen some big M&A so there should be a mild M&A premium priced into shares of TXRH.

 

 

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